Appendix 68

SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997

Notification S.O. 124(E).‑ In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India, Act 1992 (15 of 1992), the Board hereby makes the following Regulations, namely:

CHAPTER I

PRELIMINARY

1. Short title and commencement

(1) These Regulations shall be called the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

(2) These Regulations shall come into force on the date of their publication in the Official Gazette.

2. Definitions

(1) In these Regulations, unless the context otherwise requires:

(a) "Act" means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b) "acquirer" means any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer;

(c) "control" shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner;

(cc) 'disinvestment' means the sale by the Central Government, of its shares or voting rights and/or control, in a listed public sector undertaking.

(d) "investigating officer" means any person appointed by the Board under Regulation 38;

(e) "person acting in concert" comprises,

(1) Persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co‑operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company.

(2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established:

(i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other;

(ii) a company with any of its directors, or any person entrusted with the management of the funds of the company;

(iii) directors of companies referred to in sub‑clause (i) of clause (2) and their associates;

(iv) mutual fund with sponsor or trustee or asset management company;

(v) foreign institutional investors with sub‑account(s);

(vi) merchant bankers with their client(s) as acquirer;

(vii) portfolio managers with their client(s) as acquirer;

(viii) venture capital funds with sponsors;

(ix) banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer:

Provided that sub‑clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work;

(x) any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2 per cent of the paid up capital of that company or with any other investment company in which such person or his associate holds not less than 2 per cent of the paid‑up capital of the latter company.

Note: For the purposes of this clause 'associate' means:

(a) any relative of that person within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and

(b) family trusts and Hindu Undivided Families;

(f) "offer period" means the period between the date of public announcement of the first offer and the date of closure of that offer;

"panel" means a panel constituted by the Board for the purpose of Regulation 4; (h) "promoter" means

(f) (1)

(i) the person or persons who are in control of the company, or

(ii) person or persons named in any offer document as promoters;

(2) a relative of the promoter within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and

(3) in case of a corporate body,

(i) a subsidiary or holding company of that body, or

(ii) any company in which the 'Promoter' holds 10 per cent or more of the equity capital or which holds 10% or more of the equity capital of the Promoter, or

(iii) any corporate body in which a group of individuals or corporate bodies or combinations thereof who hold 20% or more of the equity capital in that company also hold 90% or more of the equity capital of the promoter'; and

(4) in case of the individual,

(i) any company in which 10% or more of the share capital is held by the 'Promoter' or a relative of the 'Promoter' or a firm or Hindu undivided family in which the 'Promoter' or his relative is a partner or coparcener or a combination thereof,

(ii) any company in which a company specified in (i) above, holds 10% or more of the share capital, or

(iii) any HUF or firm in which the aggregate share of the Promoter and his relatives is equal to or more than 10% of the total;

(i) "public financial institution" means a public financial institution as defined in section 4A of the Companies Act, 1956;

(ia) "public sector undertaking" means a company in which the Central Government holds 50 per cent. or more of its equity capital or is in control of the company.

(j) "public shareholding" means shareholding in the hands of person(s) other than the acquirer and persons acting in concert with him;

(k) "shares" means shares in the share capital of a company carrying voting rights and includes any security which would entitle the holder to receive shares with voting rights;

(l) "sick industrial company" shall have the same meaning assigned to it in clause (o) of subsection (1) of section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) or any statutory re‑enactment thereof;

(m) "state level financial institution" means a state financial corporation established under section 3 of the State Financial Institutions Act, 1951 and includes development corporation established as a company by a State Government with the object of development of industries or agricultural activities in the State;

(n) "stock exchange" means a stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(o) "target company" means a listed company whose shares or voting rights or control is directly or indirectly acquired or is being acquired.

(2) All other expressions unless defined herein shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956, or the Companies Act, 1956, or any statutory modification or re‑enactment thereto, as the case may be.

3. Applicability of the Regulation

(1) Nothing contained in Regulations 10, 11 and 12 of these Regulations shall apply to:

(a) allotment in pursuance of an application made to a public issue:

Provided that if such an allotment is made pursuant to a firm allotment in the public issues, such allotment shall be exempt only if full disclosures are made in the prospectus about the identity of the acquirer who has agreed to acquire the shares, the purpose of acquisition, consequential changes in voting rights, shareholding pattern of the company and in the Board of Directors of the Company, if any, and whether such allotment would result in change in control over the company,

(b) allotment pursuant to an application made by the shareholder for rights issue,

(i) to the extent of his entitlement; and

(ii) upto the percentage specified in regulation 11:

Provided that the limit mentioned in sub‑clause (ii) will not apply to the acquisition by any person, presently in control of the company and who has in the rights letter of offer made disclosures that they intended to acquire additional shares beyond their entitlement, if the issue is undersubscribed:

Provided further that this exemption shall not be available in case the acquisition of securities results in the change of control of management,

(c) preferential allotment, made in pursuance of a resolution passed under section 81 (1A) of the Companies Act, 1956 (1 of 1956):

Provided that,

(i) Board Resolution in respect of the proposed preferential allotment is sent to all the stock exchanges on which the shares of the company are listed for being notified on the notice board;

(ii) full disclosures of the identity of the class of the proposed allottee(s) is made, and if any of the proposed allottee(s) is to be allotted such number of shares as would increase his holding to 5% or more of the post issued capital, then in such cases, the price at which the allotment is proposed, the identity of such person(s) the purpose of and reason for such allotment, consequential changes, if any, in the board of directors of the company and in voting rights, the shareholding pattern of the company, and whether such allotment would result in change in control over the company are all disclosed in the notice of the General Meeting called for the purpose of consideration of the preferential allotment,

(d) allotment to the underwriters pursuant to any underwriting agreement,

(e) inter se transfer of shares amongst:

(i) group companies, coming within the definition of group as defined in the Monopolies and Restrictive Trade Practices Act, 1969 (25 of 1969);

(ii) relatives within the meaning of section 6 of the Companies Act, 1956 (1 of 1956);

(iii)

(a) Indian promoters and foreign collaborators who are shareholders;

(b) Promoters:

Provided that the transferor(s) as well as the transferee(s) in sub‑clauses (a) and (b) have been holding individually or collectively not less than 5% shares in the target company for a period of at least three years prior to the proposed acquisition.

Explanation.‑The benefit of availing of exemption from applicability of Regulations for increasing shareholding or inter se transfer of shareholding among group companies, relatives and promoters shall be subject to such group companies or relatives or promoters filing statements concerning group and individual shareholding as required under Regulations 6, 7 and 8,

(f) acquisition of shares in the ordinary course of business by

(i) a registered stock‑broker of a stock exchange on behalf of clients;

(ii) a registered market of a stock exchange in respect of shares for which he is the market maker, during the course of market making;

(iii) by Public Financial Institutions on their own account;

(iv) by banks and public financial institutions as pledgees,

(g) acquisition of shares by way of transmission on succession or inheritance,

(h) acquisition of shares by government companies within the meaning of section 617 of the Companies Act, 1956 (1 of 1956) and statutory corporations,

(i) transfer of shares from State level financial institutions, including their subsidiaries, to co-promoter(s), of the company pursuant to an agreement between such financial institution and such co‑promoter(s),

(ia) transfer of shares from venture capital funds or foreign venture capital investors registered with the Board to promoters of a venture capital undertaking or venture capital undertaking pursuant to an agreement between such venture capital fund or foreign venture capital investors with such promoters or venture capital undertaking.

(j) pursuant to a scheme:

(i) framed under section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985;

(ii) of arrangement or reconstruction including amalgamation or merger or demerger under any law or regulation, Indian or foreign,

(k) acquisition of shares in companies whose shares are not listed on any stock exchange.

Explanation.‑The exemption under clause (k) above shall not be applicable if by virtue of acquisition or change of control of any unlisted company, whether in India or abroad, the acquirer acquires shares or voting rights or control over a listed company

(1) such other cases as may be exempted from the applicability of Chapter III by the Board under Regulation 4.

(2) Nothing contained in Chapter III of the Regulation shall apply to acquisition of Global Depository Receipts or American Depository Receipts so long as they are not converted into shares carrying voting rights.

(3) In respect of acquisitions under clause (c), (e), (h) and (i) of sub‑regulation (1), the stock exchanges where the shares of the company are listed shall, for information of the public, be notified of the details of the proposed transactions at least 4 working days in advance of the date of the proposed acquisition, in case of acquisition exceeding 5% of the voting share capital of the company.

(4) In respect of acquisitions under clauses (a), (b), (c), (e) and (i) of sub‑regulation (1), the acquirer shall, within 21 days of the date of acquisition, submit a report along with supporting documents to the Board giving all details in respect of acquisitions which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him) would entitle such person to exercise 15% or more of the voting rights in a company.

(5) The acquirer shall, along with the report referred to under sub‑regulation (4), pay a fee of Rs. 10,000 to the Board, either by a bankers cheque or demand draft in favour of the Securities and Exchange Board of India, payable at Mumbai.

NOTES

Transaction not inter se promoters.‑ Regulation 3(3) and (4) are not attracted where the acquisition of shares is not inter se promoters. Consequently therefore, there is no requirement of reporting in respect of such transactions. The order imposing penalty could not survive. Amol J. Shah v. SEBI, (2000) 39 CLA 244 (SAT).

4. The Takeover Panel

(1) The Board shall for the purpose of this Regulation constitute a Panel of majority of independent persons from within the categories mentioned in sub‑section (5) of section 4 of the Act.

(2) For seeking exemption under clause (1) of sub‑regulation (1) of Regulation (3), the acquirer shall file an application with the Board, giving details of the proposed acquisition and the grounds on which the exemption has been sought.

(3) The acquirer shall, along with the application referred to under sub‑ regulation (2), pay a fee of Rs. 25,000 to the Board, either by a bankers cheque or demand draft in favour of the Securities and Exchange Board of India, payable at Mumbai.

(4) The Board shall within days of the receipt of an application under sub‑ regulation (2) forward the application to the Panel.

(5) The Panel shall within 15 days from the date of receipt of application make a recommendation on the application to the Board.

(6) The Board shall after affording reasonable opportunity to the concerned parties and after considering all the relevant facts including the recommendations, if any, pass a reasoned order on the application, under sub‑regulation (2) within 30 days thereof.

(7) The order of the Board under sub‑regulation (6) shall be published by the Board.

5. Power of the Board

In order to remove any difficulties in the interpretation or application of the provisions of these Regulations, the Board shall have the power to issue directions through guidance notes or circulars:

Provided that where any direction is issued by the Board in a specific case relating to interpretation or application of any provision of these Regulations, it shall be done only after affording a reasonable opportunity to the concerned parties and after recording reasons for direction.

CHAPTER II

DISCLOSURES OF SHAREHOLDING AND CONTROL IN A LISTED COMPANY

6. Transitional provision

(1) Any person, who holds more than five per cent shares or voting rights in any company, shall within two months of notification of these Regulations disclose his aggregate shareholding in that company, to the company.

(2) Every company whose shares are held by the persons referred to in sub‑ regulation (1) shall, within three months from the date of notification of these Regulations, disclose to all the stock exchanges on which the shares of the company are listed, the aggregate number of shares held by each person.

(3) A promoter or any person having control over a company shall within two months of notification of these Regulations disclose the number and percentage of shares or voting rights held by him and by person(s) acting in concert with him in that company, to the company.

(4) Every company, whose shares are listed on a stock exchange, shall within three months of notification of these regulations, disclose to all the stock exchanges on which the shares of the company are listed, the names and addresses of promoters and, or person(s) having control over the company, and number and percentage of shares of voting rights held by each such persons.

7. Acquisition of 5% and more shares or voting rights of a company

(1) Any acquirer, who acquires shares or voting rights which (taken together with shares or voting rights, if any, held by him) would entitle him to more than five per cent shares or voting rights in a company, in any manner whatsoever, shall disclose the aggregate of his shareholding of voting rights in that company, to the company.

(1A) Any acquirer who has acquired shares or voting rights of a company, under sub‑regulation (1) of regulation 11, shall make disclosures of such acquisition as well as the aggregate of his pre and post acquisition of shareholding and voting rights of the company when such acquisition aggregates to 5% and 10% of the voting rights.

(2) The disclosures mentioned in sub‑regulation (1) [and (1A)] shall be made within four working days of,

(a) the receipt of intimation of allotment of shares; or

(b) the acquisition of shares or voting rights as the case may be.

(3) Every company, whose shares are acquired in a manner referred to in sub‑regulation (1) [and (1A)] , shall disclose to all the stock exchanges on which the shares of the said company are listed the aggregate number of shares held by each of such persons referred above within seven days of receipt of information under sub‑regulation (1) [and (1A)].

NOTES

The SEBI (Substantial Acquisition of shares and takeover) Regulations, 1994, provide for transparency relating to substantial acquisition of shares by "persons acting in concert" meaning thereby persons, who pursuant to an agreement or understanding, acquire or agree to acquire shares in a company for a common objective. Though dislodging the management has not been specifically spelt out in these regulations it can be easily inferred that the threshold limit for a challenge to the management is a holding of at least 30 per cent. because any acquisition of shares beyond 10 per cent. leads to compulsory acquisition up to 30 per cent. Of course, for reckoning the percentage, acquisition by all persons acting in concert has to be taken into account. In the present case, even "acting in concert" has not been established. Further, the holding is much below even 10 per cent. Thus, clearly there is no good reason for ordering an investigation. If further acquisitions do take place an alternative remedy is also available to the petitioner and the company. Padma Taparia v. Assam Brook Ltd., (1997) 88 Com Cases 838 at p. 859: (1996) 3 Comp LJ 396 (CLB‑PB).

The expression 'acquirer' for the purpose of the Takeover Regulations means any person who acquires or agrees to acquire shares in a company either by himself or with any person acting in concert with the acquirer. Acquisition of those shares carrying voting rights alone would attract the provisions oll the regulation. Admittedly, the appellant was already holding 4% shares while acquiring rest of the shares. The appellant's contention that the purchase of shares was a conditional one subject to compliance of the SEBI Regulations and approval, that in the event of noncompliance or SEBI rejecting the deal, the shares would revert back to the sellers, and that the, shares will carry voting rights only on entering the transfer of shares in the company's records, was held to be devoid of any legal support. The Takeover Regulations do not exempt such 'ad hoc' acquisition from its scope. A combined reading of regulations 9(1) and 13 (of 1994 Regns.) would clearly show that the time limit prescribed for public announcement to acquire shares is relatable to the finalisation of the negotiations or entering into the agreement or memorandum of understanding to acquire shares. Date of registration of shares acquired in the company's register is not the starting point. Sharad Doshi v. The Adjudicating Officer, (1998) 3 Comp LJ 145 at p. 150 : (1998) 29 CLA 383 (SAT).

In terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994. Regulation 6, an acquirer who held five per cent or less than five per cent shares was required to disclose his aggregate holding in the company to the stock exchanges where the shares ware listed the four days of the acquisition. [S. 9 of 1997 Reglns.]

Regulation 9(1) [1994] provided that an acquirer who held shares carrying ten per cent or voting rights in a company would not, through negotiations, acquire any further shares, which when taken together with his existing shareholdings would carry more than ten per cent of the voting rights, unless, the acquirer makes a public announcement to acquire shares at a minimum price from the company's other shareholders. In terms of regulation 13 [1994], the public announcement referred to in regulation 9 [1994] was required to be made not later than four d either the finalisation of the negotiation or entering into an agreement or memorandum of standing to acquire shares. The expression 'acquirer' for the purpose of the takeover regulation means any person who acquires or agrees to acquire shares in a company either by himself o any person acting in concert with the acquirer. Acquisition of those shares carrying voting alone would attract the provisions of the regulation.

Regulating substantial acquisition of shares and takeover of companies for protecting the it of investors is one of the functions assigned to SEBI by the Act. For these purposes, SEBI n the Takeover Regulations, The Takeover Regulations provide for the transparency in the transitions and also for following the principles of equity and fairness for the benefit of the share at large. Regulation 9 [1994] [now Regulation 10, 1997] which provides for a public announcement to acquire shares of company at a minimum offer price from the other shareholders is one of thw provisions in the Takeover Regulations for protecting the interest of the investors. The SEE provides a maximum penalty of five lakh rupees for the offence of non‑disclosure of acquisition shares or failure to make public announcement referred to above. The Act also provides for cution of offenders. Sharad Doshi v. The Adjudicating Officer, (1998) 3 Comp LJ 145, at p. (1998) 29 CLA 383 (SAT. Mumbai).

The Securities Appellate Tribunal dismissed the appeal against an order of Adjudicating Officer imposing a penalty of Rs. one lakh for acquiring the shares of a company in disregard to the over Regulations. The violation could not be termed as a mere technical lapse. The Adjudicating officer had taken into account the relevant factors and the provisions of s. 15J of the SEBI Act before levying the penalty. Sharad Doshi v. The Adjudicating Officer, (1998) 2 Comp, LJ 145 : (1198) 29 CLA 383 (SAT).

8. Continual disclosures

(1) Every person, including a person mentioned in Regulation (6) who holds more than [fifteen] per cent shares or voting rights in any company, shall, within 21 days from the financial yeaning March 31, make yearly disclosures to the company, in respect of his holdings as on 31^st March.

(2) A promoter or every person having control over a company shall, within 21 days from financial year ending March 31, as well as the record date of the company for the purposes of ration of dividend, disclose the number and percentage of shares or voting rights held by hi by persons acting in concert with him, in that company, to the company.

(3) Every company whose share are listed on a stock exchange, shall within 30 days from financial year ending March 31, as well as the record date of the company for the purposes of ration of dividend, make yearly disclosures to all the stock exchanges on which the shares company are listed, the changes, if any, in respect of the holdings of the persons referred to sub‑regulation (1) and also holdings of promoters or person(s) having control over the comp on 31^st March.

(4) Every company whose shares are listed on a stock exchange shall maintain a register specified format to record the information received under sub‑regulation (3) of Regulation (6) regulation (1) of Regulation (7) and sub‑regulation (2) of Regulation (8).

9. Power to call for information

The stock exchanges and the company shall furnish to the Board information with regard disclosures made under Regulations 6, 7 and 8 as and when required by the Board.

CHAPTER III

SUBSTANTIAL ACQUISITION OF SHARES OR VOTING RIGHTS IN AND ACQUISITION OF CONTROL OVER A LISTED COMPANY

10. Acquisition of [15%] or more of the shares or voting rights of any company

No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise [fifteen] per cent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.

11. Consolidation of holdings

(1) No acquirer who together with persons acting in conceit with him has acquired, in accordance with the provisions of law, [15% or more but less than 75%] of the shares or voting rights in a company, shall acquire, either by himself or through or with persons acting in concert with him, additional shares or voting rights entitling him to exercise more than [10%] of the voting rights, in any period of 12 months, unless such acquirer makes a public announcement to acquire shares in accordance with the Regulations.

(2) No acquirer who, together with persons acting in concert with him has acquired, in accordance with the provisions of law, 75% of the shares or voting rights in a company, shall acquire either by himself or through persons acting in concert with him any additional shares or voting rights, unless such acquirer makes a public announcement to acquire shares in accordance with the regulations.

(3) Notwithstanding anything contained in regulations 10, 11 and 12, in the case of disinvestments of a public sector undertaking, an acquirer who together with persons acting in concert with him, has made a public announcement, shall not be required to make another public announcement at the subsequent stage of further acquisition of shares or voting rights or control of the public sector undertaking provided:

(i) both the acquirer and the seller are the same at all the stages of acquisition, and

(ii) disclosures regarding all the stages of acquisition, if any, are made in the letter of offer issued in terms of regulation 18 and in the first public announcement.

Explanation.‑For the purposes of Regulation 10 and Regulation 11, acquisition shall mean and include,

(a) direct acquisition in a listed company to which the Regulations apply;

(b) indirect acquisition by virtue of acquisition of holding companies, whether listed or unlisted, whether in India or abroad.

NOTES

On a perusal of regulation 10(1) [1994] (11 of 1997) as it existed, it was clear that the provisions were applicable to acquisition of 'further' shares from the 'open market' by an existing shareholder, beyond the prescribed ten per cent limit. In terms of regulation 2(b) of the Regulation, 'acquirer' means any person who acquires or agrees to acquire shares in a company either by himself or with any person acting in concert with the acquirer. But Regulation 10(1), 1994 (now RegIn. 11 of 1997) was not confined to an acquirer simpliciter, but to an acquirer "who holds shares carrying ten per cent or less of voting rights in the capital of the company". The said qualification to the acquirer does not appear to be an inadvertent addition in the regulation as is evident from the various other provisions of the Takeover Regulations. Regulation 10(1), 1994 refers to acquisition of 'further' shares. The word 'further' means additional or extra. Expression 'further' is referable to something already in existence. This view is further strengthened from the same regulation as it requires to take into consideration the 'existing shareholdings' of the acquirer for computing the ten per cent outer limit. The requirement of holding shares as a pre‑requisite to attract the Takeover Regulations is found not only in regulation 10(l), 1994 but also in regulation 9, 1994 dealing with acquisition of further shares through negotiation and in regulation 14, 1994 of the Takeover Regulations mandating a public announcement of intention to acquire shares referred to in regulation 10, 1994 which would increase the 'existing shareholdings of the person' making the announcement. Fascinating Leasing & Finance (P) Ltd. v. Securities & Exchange Board of India, (1998) 30 CLA 206 at p. 216 (Bom).

12. Acquisition of control over a company

Irrespective of whether or not there has been any acquisition of shares or voting rights in a company, no acquirer shall acquire control over the target company, unless such person makes a public announcement to acquire shares and acquires such shares in accordance with the Regulations:

Provided that nothing contained herein shall apply to any change in control which takes place in pursuance to a resolution passed by the shareholders in a general meeting.

Explanation.‑(i) For the purposes of this Regulation where there are two or more persons in control over the target company, the cessor of any one such person from such control shall not be deemed to be a change in control of management nor shall any change in the nature and quantum of control amongst them constitute change in control of management:

Provided however that if the transfer of joint control to sole control is through sale at less than the market value of the shares, a shareholders meeting of the target company shall be convened to determine mode of disposal of the shares of the outgoing shareholder, by a letter of offer or by block‑transfer to the existing shareholders in control in accordance with the decision passed by a special resolution. Market value in such cases shall be determined in accordance with Regulation 20.

(ii) Where any person or persons are given joint control, such control shall not be deemed to be a change in control so long as the control given is equal to or less than the control exercised by person(s) presently havinj control over the company.

NOTES

Further issue of capital to hit back takeover bid.‑ The petitioner was holding 9.5 per cent share capital of the respondent‑company. He made a public offer for acquisition of further 20 per cent shares of the respondent. Thereafter, the Mehta group, which controlled the respondent company, purported in increase the issued and subscribed capital of the company. The petitioner questioned this extension of capital as being violative of regulations 10, 11, 12 and 23. The Bombay High Court refused to accept the argument of the petitioner and consequently, declined to grant an interim relief of inducting the respondent from moving, discussing and/or voting on the proposed resolution at the annual general meeting. The court said : "There is no question of granting interim order restraining respondent company from passing any resolution or from issuing any further shares or preference shares. Such interim relief would be contrary to the right conferred by section 81(1A). Further, regulations 3 of the Regulations makes it clear that restrictions mentioned in regulations 10, 11 and 12 will not apply to preferential allotment made in pursuance of a resolution passed under section 81(1A). Hence, there is no question of granting any interim relief directing respondent company not to pass the contemplated resolution which prima facie, would be in conformity with the aforesaid section 81 (1A). Prayer for interim direction is, therefore, rejected. However, it would be open to the petitioners to challenge such resolution, if passed, by filing appropriate proceedings permissible under law." Parul Patel v. Securities & Exchange Board of India, (1999) 33 CLA 234 at p. 238 (Bom).

Exemption from public announcement

In exercising its powers under section 402 and moulding the relief according to facts and circumstances of the case, the Company Law Board can take into account violations not only of the provisions of the Companies Act but also of other Acts and Rules and Regulations made thereunder. In this case, the allegation was that the respondent shareholder had transferred his majority shareholding to an outsider. the finding of the Company Law Board was that the transfer of shares in question was not violative of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 nor it was motivated towards the alleged oppressive shareholders because there was a genuine purpose in the transfer. When the SEBI Takeover Regulations provide for a gateway under the proviso to regulation 12 (by passing a special resolution at a meeting) from making a public offer to gain control over the company, such a gateway could not be challenged. Further, in view of indefiniteness in the provisions relating to 'deciding to acquire' in regulation 14(l), no opinion is required to be offered regarding the time‑limit for making the public offer. Krishna Das Paul v. Calcutta Chemicals Co. Ltd., (1998) 5 Comp LJ 569 : (1999) 19 SCL 339 : (1999) 32'CLA 293 (CLB‑Principal Bench).

13. Appointment of a Merchant Banker

Before making any public announcement of offer referred to in Regulation 10 or Regulation 11 or Regulation 12, the acquirer shall appoint a merchant banker in Category‑I holding a certificate of registration granted by the Board, who is not associate of or group of the acquirer or the target company.

14. Timing of the Public Announcement of Offer

(1) The public announcement referred to in Regulation 10 or Regulation 11 shall be made by the merchant banker not later‑than four working days of entering into an agreement for acquisition of shares or

voting rights or deciding to acquire shares or voting rights exceeding the respective percentage specified therein:

Provided that in the case of disinvestment of a public sector undertaking, the public announcement shall be made by the merchant banker not later than four working days of the acquirer executing the share purchase agreement or shareholders agreement with the Central Government for the acquisition of shares or voting rights exceeding the percentage of shareholding referred to in regulation 10 or regulation 11 or the transfer of control over a target public sector undertaking.

(2) In case of an acquirer acquiring securities, including Global Depositories Receipts or American Depository Receipts which, when taken together with the voting rights, if any already held by him or persons acting in concert with him, would entitle him to voting rights, exceeding the percentage specified in Regulation 10 or Regulation 11, the public announcement referred to in sub regulation (1) shall be made not later than four working days before he acquires voting rights on such securities upon conversion, or exercise of option, as the case may be.

(3) he public announcement referred to in Regulation 12 shall be made by the merchant banker not later than four working days after any such change or changes are decided to be made as would result in the acquisition of control over the target company by the acquirer.

15. Public Announcement of Offer

(1) The public announcement to be made under Regulation 10 or 11 or 12 shall be made in all editions of one English national daily with wide circulation, one Hindi national daily with wide circulation and a regional language daily with wide circulation at the place where the registered office of the target company is situated and at the place of the stock exchange where the shares of the target company are most frequently traded.

(2) A copy of the public announcement to be made under Regulation 10, 11 or 12 shall be submitted to the Board through the merchant banker at least two working days before its issuance.

(3) Simultaneous with the submission of the public announcement to the Board, the public announcement shall also be sent to all the stock exchanges on which the shares of the company are listed for being notified on the notice board, and to the target company at its registered office for being placed before the board of directors of the Company.

(4) The offer under these Regulations shall be deemed to have been made on the date on which the public announcement has appeared in any of the newspapers referred to in sub‑regulation (1).

16. Contents of the Public Announcement of Offer

The public announcement referred to in Regulation 10 or 11 or 12 shall contain the following particulars, namely:

(i) the paid‑up share capital of the target company, the number of fully paid‑up and partly paid‑ up shares;

(ii) the total number and percentage of shares proposed to be acquired from the public, subject to a minimum as specified in sub‑regulation (1) of Regulation 21;

(iii) the minimum offer price for each fully paid‑up or partly paid‑up share;

(iv) mode of payment of consideration;

(v) the identity of the acquirer(s) and in case the acquirer is a company or companies, the identity of the promoters and, or the persons having control over such company(ies) and the group, if any, to which the company(ies) belong;

(vi) the existing holding, if any, of the acquirer in the shares of the target company, including holdings of persons acting in concert with him;

(vii) salient features of the agreement, if any, such as the date, the name of the seller, the price at which the shares are being acquired, the manner of payment of the consideration and the number and percentage of shares in respect of which the acquirer has entered into the agreement to acquire the shares or the consideration, monetary or otherwise, for the acquisition of control over the target company, as the case may be;

(viii) the highest and the average price paid by the acquirer or‑persons acting in concert with him for acquisition, if any, of shares of the target company made by him during the twelve month period prior to the date of public announcement;

(ix) object and purpose of the acquisition of the shares and future plans, if any, of the acquirer for the target company, including disclosures whether the acquirer proposes to dispose of or otherwise encumber any assets of the target company in the succeeding two years except in the ordinary course of business of the target company:

Provided that where the future plans are set out, the public announcement shall also set out how the acquirers propose to implement such future plans;

(x) the 'specified date' as mentioned in Regulation 19;

(xi) the date by which individual letters of offer would be posted to each of the shareholders;

(xii) the date of opening and closure of the offer and the manner in which and the date by which the acceptance or rejection of the offer would be communicated to the shareholders;

(xiii) the date by which the payment of consideration would be made for the shares in respect of which the offer has been accepted;

(xiv) disclosure to the effect that firm arrangement for financial resources required to implement the offer is already in place, including details regarding the sources of the funds whether domestic, i.e., from banks, financial institutions, or otherwise or foreign, i.e., from Non‑resident Indians or otherwise;

(xv) provision for acceptance of the offer by person(s) who own the shares but are not the registered holders of such shares;

(xvi) statutory approvals, if any, required to be obtained for the purpose of acquiring the shares under the Companies Act, 1956 (1 of 1956); the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969); The Foreign Exchange Regulation Act, 1973; (46 of 1973) and/or any other applicable laws;

(xvii) approvals of banks or financial institutions required, if any;

(xviii) whether the offer is subject to a minimum level of acceptance from the shareholders; and

(xix) such other information as is essential for the shareholders to make an informed decision in regard to the offer.

17. Brochures, advertising material, etc.

The public announcement of the offer or any other advertisement, circular, brochure, publicity material or letter of offer issued in relation to the acquisition of shares shall not contain any misleading information.

18. Submission of Letter of Offer to the Board

(1) Within fourteen days from the date of public announcement made under Regulation 10, 11 or 12 as the case may be, the acquirer shall, through its merchant banker, file with the Board, the draft of the letter of offer, containing disclosures as specified by the Board.

(2) The letter of offer shall be despatched to the shareholders not earlier than 21 days from its submission to the Board under sub‑regulation (1):

Provided that if, within 21 days from the date of submission of the letter of offer, the Board specifies changes, if any, in the letter of offer, (without being under any obligation to do so) the merchant banker and the acquirer shall carry out such changes before the letter of offer is despatched to the shareholders.

(3) The acquirer shall, along with the draft letter of offer referred to in sub‑regulation (1), pay a fee of Rs. 50,000 to the Board, either by a banker's cheque or demand draft in favour of the Securities and Exchange Board of India, payable at Mumbai.

19. Specified date

The public announcement shall specify a date, which shall be the 'specified date' for the purpose of determining the names of the shareholders to whom the letter of offer should be sent:

Provided that such specified date shall not be later than the thirtieth day from the date of the public announcement.

20. Minimum offer price

(1) The offer to acquire the shares under Regulation 10, 11 or 12 shall be made at a minimum offer price which shall be payable

(a) in cash; or

(b) by exchange and, or transfer of shares of acquirer company, if the person seeking to acquire the shares is a listed body corporate; or

(d) a combination of clauses (a), (b) or (c):

Provided that where payment has been made in cash ‑ to‑ any c4ass of shareholders for acquiring their shares under any agreement or pursuant to any acquisition in the open market or in any other manner during the preceding 12 months from the date of public announcement, the offer document shall provide that the shareholders have the option to accept payment either in cash ‑or by exchange of shares or other secured instruments referred to above.

(2) For the purposes of sub‑regulation (1), the minimum offer price shall be the highest of

(a) the negotiated price under the agreement referred to in sub‑regulation (1) of regulation 14;

(b) highest price paid by the acquirer or persons acting in concert with him for any acquisitions, including by way of allotment in a public or rights issue, if any, during the 26 week period prior to the date of public announcement;

(c) the price paid by the acquirer under a preferential allotment made to him or to persons acting in concert with him at any time during the twelve months period upto the date of closure of the offer;

(d) the average of the weekly high and low of the closing prices of the shares of the target company us quoted on the stock exchange where the shares of the company are most frequently traded during the 26 weeks preceding the date of public announcement.

Explanation. ‑In the case of disinvestments of a public sector undertaking, the relevant date for the calculation of the average of the weekly high and low of the closing prices of the shares of the public sector undertaking, as quoted on the stock exchange where its shares are most frequently traded, shall be the date preceding the date when the Central Government (after receiving the cabinet approval) announces the name of the successful bidder.

(3) Where the shares of the target company are infrequently traded, the offer price shall be determined by issuer and the merchant banker taking into account the following factors:

(a) the negotiated price under the agreement referred to in sub‑regulation (1) of Regulation 14;

(b) highest price paid by the acquirer or persons acting in concert with him for acquisitions including by way of allotment in a public or rights issue, if any, during the twenty six week period prior to the date of public announcement;

(c) the price paid by the acquirer under a preferential allotment made to him or to persons acting in concert with him, at any time during the twelve month period upto the date of closure of the offer; and

(d) other parameters including return on networth, book value of the shares of the target company, earning per share, price earning multiple vis‑ti‑vis the industry average.

Explanation.‑

(i) For the purpose of this clause, shares will be deemed to be infrequently traded if on the stock exchange, the annualised trading turnover in that share during the preceding 6 calendar months prior to the month in which the public announcement is made is less than two per cent (by number of shares) of the listed shares. For this purpose, the weighted average number of shares listed during the said six months period may be taken.

(ia) In the case of disinvestment of a public sector undertaking, the shares of such an undertaking shall be deemed to be infrequently traded, if on the stock exchange, the annualised trading turnover in the shares during the preceding six calendar months prior to the month, in which the Central Government, after receiving the cabinet approval, announces the name of the successful bidder, is less than two per cent. (by the number of shares) of the listed shares. For this purpose the weighted average number of shares listed during the six months period may be taken.

(ii) In case of shares which have been listed within six months preceding the public announcement, the trading turnover may be annualised with reference to the actual number of days for which the share has. been listed.

(4) Notwithstanding the provisions of sub‑regulations (1), (2) and (3) above, where the acquirer has acquired shares in the open market or through negotiation or otherwise, after the date of public announcement at a price higher than the minimum offer price stated in the letter of offer, then the highest price paid for such acquisition shall be payable for all acceptances received under the offer.

Provided that no such acquisition shall be made by the acquirer during the last seven working days prior to the closure of the offer.

(5) In case where shares or secured instruments of the acquirer company are offered in lieu of cash payment, the value of such shares or secured instruments shall be determined in the same mariner as mentioned in sub‑regulations (2) and (3) above to the extent applicable, as duly certified by an independent Category I Merchant Banker (other than the managers to the offer) or an independent Chartered Accountant of 10 years standing.

(6) The letter of offer shall contain justification on the basis on, which the price has been determined.

Explanation.‑

(1) The highest price under clause (b) or the average price under clause (d) of sub regulation (2) may be adjusted for quotations, if any, or curn‑fights, or cum‑bonus basis during the said period.

(2) Where the public announcement of offer is pursuant to acquisition by way of firm allotment in a public issue or preferential allotment, the average price under clause (d) of sub‑regulation 2 shall be calculated with reference to the 26 week period preceding the date of the board resolution which authorised the firm preferential allotment.

(3) Where the shareholders have been provided with an option to accept payment either in cash or by way of exchange of security then, subject to the provisions of Regulation 20, the pricing for the cash offer could be different from that of a share exchange offer or offer for exchange with secured instruments, provided that the disclosures in the offer documents contains suitable justification for such differential pricing.

(4) Where the offer is subject to a minimum level of acceptances, the acquirer may subject to the provision of Regulation 20, indicate A lower price for the minimum acceptance of 20%, should the offer not receive full acceptance.

21. Minimum number of Shares to be acquired

(1) The public offer shall be made to the shareholders of the target company to acquire from them an aggregate minimum of 20% of the voting capital of the company:

Provided that where the open offer is made in pursuance to sub‑regulation (2) of Regulation 11, the public offer shall be for such percentage of the voting capital of the company as may be decided by the acquirer.

(2) Where the offer is conditional upon minimum level of acceptances from the shareholders as provided for in clause (xviii) of Regulation 16, the provisions of sub‑regulation (1) of this regulation shall not be applicable, if the acquirer has deposited in the escrow account in cash a sum of 50% of the consideration payable under the public offer.

(3) If the public offer results in the public shareholding being reduced to 10% or less of the voting capital of the company, or if the public offer is in respect of a company which has public shareholding of less than 10% of the voting capital of the company, the acquirer shall either

(a) within a period of 3 months from the date of closure of the public offer, make an offer to buy out the outstanding shares remaining with the shareholders at the same offer price, which may result in delisting of the target company; or

(b) undertake to disinvest through an offer for sale or by a fresh issue of capital to the public, which shall open within a period of 6 months from the date of closure of the public offer, such number of shares so as to satisfy the listing requirements.

(4) The letter of offer shall state clearly the option available to the acquirer under sub‑regulation (3).

(5) For the purpose of computing the percentage referred to sub‑regulation (1), (2) and (3) the voting rights as at the expiration of 30 days after the closure of the public offer shall be reckoned.

(6) Where the number of shares offered for sale by the shareholders are more than the shares agreed to be acquired by the person making the offer, such person shall, accept the offers received from the shareholders on a proportional basis, in consultation with the merchant banker, taking care to ensure that the basis of acceptance is decided in a fair and equitable manner and does not result in non‑marketable lots:

Provided that acquisition of shares from a shareholders shall not be less than the minimum marketable lot or the entire holding if it is less than the marketable lot.

22. General Obligations of the acquirer

(1) The public announcement of offer to acquire the shares. of the target company shall be made only when the acquirer is able to implement the offer.

(2) Within 14 days of the public announcement of the offer, the acquirer shall send a copy of the draft letter of offer to the target company at its registered office address, for being placed before the board of directors and to all the stock exchanges where the shares of the company are listed.

(3) The acquirer shall ensure that the letter of offer is sent to all the shareholders (including non resident Indians) to the target company, whose names appear on the register of member of the company as on the specified date mentioned in the public announcement, so as to reach them within 45 days from the date of public announcement:

Provided that where the public announcement is made pursuant to an agreement to acquire shares or control over the target company, the letter of offer shall be sent to shareholders other than the parties to the agreement.

Explanation‑

(i) A copy of the letter of offer shall also be sent to the Custodians of Global Depository Receipts or American Depository Receipts to enable such persons to participate in the open offer, if they are entitled to do so.

(ii) A copy of the letter of offer shall also be sent to warrant holders or convertible debenture holders, where the period of exercise of option or conversion falls within the offer period.

(4) The date of opening of the offer shall be not later than the sixtieth day from the date of public announcement.

(5) The offer to acquire shares from the shareholders shall remain open for a period of 30 days.

(6) In case the acquirer is a company, the public announcement of offer, brochure, circular, letter of offer or any other advertisement or publicity material issued to shareholders in connection with the offer must state that the directors accept the responsibility for the information contained in such documents:

Provided that if any of the directors desires to exempt himself from responsibility for the information in such document, such director shall issue a statement to that effect, together with reasons thereof for such statement.

(7) During the offer period, the acquirer or persons acting in concert with him shall not be entitled to be appointed on the board of directors of the target company:

Provided that in case of acquisition of shares or voting rights or control of a public sector undertaking pursuant to a public announcement made under the proviso to sub‑regulation (1) of regulation 14, the provisions of sub‑regulation (8) of regulation 23 shall be applicable.

(8) Where an offer is made conditional upon minimum level of acceptances, the acquirer or any person acting in concert with him

(i) shall irrespective of whether or not the offer received in response to the minimum level of acceptances, acquire shares from the public to the extent of the minimum percentage specified in sub‑regulation (1) of Regulation 21:

Provided that the provisions of this clause shall not be applicable 4n case the acquirer has deposited in the escrow account, in cash, 50% of the. consideration payable under the public offer;

(ii) shall not acquire, during the offer period, any shares in the target company, except by way of fresh issue of shares of the target company, as provided for under Regulation 3;

(iii) shall be liable for penalty of forfeiture of entire escrow amount, for the non‑fulfillment of obligations under the Regulations.

(9) If any of the persons representing or having interest in the acquirer is already a director on the board of the target company or is an "insider" within the meaning of Securities and Exchange Board of India (Insider Trading) Regulations, 1992, he shall recuse himself and not participate in any matter(s) concerning or 'relating' to the offer including any preparatory steps leading to the offer.

(10) On or before the date of issue of public announcement of offer, the acquirer shall create an escrow account as provided under Regulation 28.

(11) The acquirer shall ensure that firm financial arrangement has been made for fulfilling the obligations under the public offer and suitable disclosures in this regard shall be made in the public announcement of offer.

(12) The acquirer shall, within a period of 30 days from the date of the closure of the offer, complete all procedures relating to the offer including payment of consideration to the shareholders who have accepted the offer and for the purpose open a special account as provided under Regulation 29. Provided that where the acquirer is unable to make the payment to the shareholders who have accepted the offer before the said period of 30 days due to non‑receipt of requisite statutory approvals, the Board may, if satisfied that non‑receipt of requisite statutory approvals was not due to any willful default or neglect of the acquirer or failure of the acquirer to diligently pursue the applications for such approvals, grant extension of time for the purpose, subject to the acquirer agreeing to pay interest to the shareholders for delay beyond 30 days, as may be specified by the Board from time to time.

(13) Where the acquirer fails to obtain the requisite statutory approvals in time on account of willful default or neglect or inaction or non‑action on his part, the amount lying in the escrow account shall be liable to be forfeited and dealt with in the manner provided in clause (e) of sub‑regulation (12) of Regulation 28, apart from the acquirer being liable for penalty as provided in the Regulations.

(14) In the event of withdrawal of offer in terms of the Regulations, the acquirer shall not make any offer for acquisition of shares of the target company for a period of six months from the date of public announcement of withdrawal of offer.

(15) In the event of non‑fulfillment of obligations under Chapter III or Chapter IV of the Regulations the acquirer shall not make any offer for acquisition of shares of any listed company for a period of twelve months from the date of closure of offer.

(16) If the acquirer, in pursuance to an agreement, acquires shares which along with his existing holding, if any, increases his shareholding beyond [15%], then such an agreement for sale of shares shall contain a clause to the effect that in case of non‑compliance of any provisions of this regulation, the agreement for such sale shall not be acted upon by the seller or the acquirer:

Provided that in the case of the acquisition of shares of a public sector undertaking pursuant to a public announcement made under. the regulations, the provisions of sub‑regulation (8) of regulation 23 shall be applicable.

(17) Where the acquirer or persons acting in concert with him has acquired any shares in terms of sub‑regulations (4) of regulations 20, shall disclose the number, percentage, price and the mode of acquisition of such shares to the stock exchanges on which the shares of the target company are listed and to the merchant banker, within 24 hours of such acquisition.

(18) Where the acquirer has not either, in the public announcement, and, or in the letter of offer, stated his intention to dispose of or otherwise encumber any assets of the target company except in the ordinary course of business of the target company, the acquirer, where he has acquired control over the target company, shall be debarred from disposing of or otherwise encumbering the assets of the target company for a period of 2 years from the date of closure of the public offer.

NOTES

SEBI Power of Investigation

It is clear that the Board (SEBI) has power to carry out investigations and to take action in accordance with the regulations against the person violating take‑over regulations, namely, acquirer, the seller, the target company, the merchant banker, as the case may be. In this context, the SEBI has the power to pass interim orders. It seems that the SEBI has power to pass interim orders before and during the inquiry or investigation to effectuate the purpose of the SEBI Act and the regulations. Under section I I of the SEBI Act, the SEBI has the power to protect the interests of the investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. The power is of a very wide nature and is not hedged in by any restrictions. This power will embrace the power to issue interim orders. lie SEBI, in a fit case, can. pass interim orders in the interests of investors and to promote the development of and to regulate the securities market under the same provision, it can frame regulations as well for the same purpose. The final orders after the inquiry are contemplated under section 11B of the Act and at that stage, it can issue such directions to any person referred to in the section as may be appropriate in the interests of investors and securities market. Both under sections 11 and 11B (SEBI Act) the duty is cast on the Board to protect the interests of the investors in securities and to promote and regulate the securities market. If at the initial stage it becomes necessary to pass an interim order, the SEBI has been endowed with such a power under section 11 of the Act. In case the‑ provisions of section 11 are construed in a restrictive manner, the interests of the investors in securities and development and regulation of securities market will suffer. Though the SEBI is possessed of the power to pass an interim order, in the instant case, it did not exercise that power on the ground that it was in the interest of the shareholders to allow them to receive the value of their shares at the rate of Rs. 100 per share which is the same rate at which the shares of SVCL held by the financial institutions were purchased by the nine companies. It cannot be said that the reason for not suspending the process set in motion by the public announcement was not adequate or was arbitrary or the reason suffered from illegality or irrationality. The grant of interim order was in the discretion of the SEBI. Such discretion cannot be interfered with even when serious and substantial questions have been raised by the petitioner and the third respondent. nose questions are for the SEBI to determine. There can be no doubt that the SEBI will bestow its consideration on the issues which arise in the case. The determination of these questions will not be made by the court sitting in writ jurisdiction when such determination lies in the domain of the authorities mentioned in the regulations. M.Z Khan v. Securities & Exchange Board of India, (1999) 1 Comp LJ 484 at p. 493 : (1999) 77 DLT 706 (Del).

23. General obligations of the board of directors of the target company

(1) Unless the approval of the general body of shareholders is obtained after the date of the public announcement of offer, the board of directors of the target company shall not, during the offer period,

(a) sell, transfer, encumber or otherwise dispose of or enter into an agreement for sale, transfer, encumbrance or for disposal of assets otherwise, not being sale or disposal of assets in the ordinary course of business, of the company or its subsidiaries; or

(b) issue any authorised but unissued securities carrying voting rights during the offer period; or

Explanation.‑Restriction on issue of securities under clause (b) of sub‑regulation (1) shall not affect the right of the target company to issue and allot shares carrying voting rights upon conversion of debentures already issued or upon exercise of option against warrants, as per pre‑determined terms of conversion/exercise of option.

(2) The target company shall furnish to the acquirer, within 7 days of the request of the acquirer or within 7 days from the specified date whichever is later, a list of shareholders or warrant holders or convertible debenture holders as are eligible for participation under Explanation (ii) to sub regulation (3) of Regulation 22 containing names, addresses, shareholding and folio number, and of those persons whose applications for registration of transfer of shares are pending with the company.

(3) Once the public announcement has been made, the board of directors of the target company shall not,

(a) appoint as additional director or fill in any casual vacancy on the board of directors, by any person(s) representing or having interest in the acquirer, till the date of certification by the merchant banker as provided under sub‑regulation (6) below:

Provided that upon closure of the offer and the full amount of consideration payable to the shareholders being deposited in the special account, changes as would give the acquirer representation on the Board or control over the company can be made by the target company;

(b) allow any person or persons representing or having interest in the acquirer, if he is already a director on the board of the target company before the date of the public announcement, to participate in any matter relating to the offer, including any preparatory steps leading thereto.

(4) The board of directors of the target company may, if they so desire, send their unbiased comments and recommendations on the offer(s) to the shareholders, keeping in mind the fiduciary responsibility of the directors to the shareholders and for the purpose seek the opinion of an independent merchant banker or a Committee of Independent Directors:

Provided that for any misstatement or for concealment of material information, the directors shall be liable for action in terms of these Regulations and the Act.

(5) The board of directors of the target company shall facilitate the acquirer in verification of securities tendered for acceptances.

(6) Upon fulfillment of all obligations by the acquirers under the Regulations as certified by the merchant banker, the board of directors of the target company shall transfer the securities acquired by the acquirer, whether under the agreement or from open market purchases, in the name of the acquirer and/or allow such changes in the board of directors as would give the acquirer representation on the board or control over the company.

(7) The obligations provided for in sub‑regulation (16) of regulation 22 shall be complied with by the company in the circumstances specified therein.

(8) The restrictions

(a) for appointment of directors on the board of the target company by the acquirer under sub‑regulation (7) of regulation 22;

(b) for acting on agreement under sub‑regulation (16) of regulation 22;

(d) for on transfer of securities or changes in the board of directors of the target company under sub‑regulation (6) of this regulation, shall not be applicable, in case of sale of shares of a public sector undertaking by the Central Government and the agreement to sell contains a clause to the effect that in case of non‑compliance with any of the provisions of the Regulations by the acquirer, transfer of shares or the change of management or control of the public sector undertaking shall vest back with the Central Government and the acquirer shall be liable to such penalty as may be imposed by the Central Government.

24. General obligations of the merchant banker

(1) Before the public announcement of offer is made, the merchant banker shall ensure that

(a) the acquirer is able to implement the offer;

(b) the provision relating to escrow account referred to in Regulation 28 has been made;

(c) firm arrangements for funds and money for payment through verifiable means to fulfill the obligations under the offer are in place;

(d) the public announcement of offer is made in terms of the Regulations.

(2) The merchant banker shall furnish to the Board a due diligence certificate which shall accompany the draft letter of offer.

(3) The merchant banker shall ensure that the draft public announcement and the letter of offer is filed with the Board, target company and also sent to all the stock exchanges on which the shares of the target company are listed in accordance with the Regulations.

(4) The merchant banker shall ensure that the contents of the public announcement of offer as well as the letter of offer are true, fair and adequate and based on reliable sources, quoting the source wherever necessary.

(5) The merchant banker shall ensure compliance of the regulations and any other laws or rules as may be applicable in this regard.

(6) Upon fulfillment of the obligations by the acquirers under the Regulations, the merchant banker shall cause the bank with whom the escrow amount has been deposited to release the balance amount to the acquirers,

(7) The merchant banker shall send a final report to the Board within 45 days from the date of closure of the offer.

25. Competitive bid

(1) Any person, other than the acquirer who has made the first public announcement, who is desirous of making any offer, shall, within 21 days of the public announcement of the first offer, make a public announcement of his offer for acquisition of the shares of the same target company.

Explanation.‑An offer made under sub‑regulation (1) shall be deemed to be a competitive bid.

(2) No public announcement for an offer or competitive bid shall be made after 21 days from the date of public announcement of the first offer.

(2A) No public announcement for a competitive bid shall be made after an acquirer has already made the public announcement under the proviso to sub‑regulation (1) of regulation 14 pursuant to entering into a share purchase or shareholders' agreement with the Central Government for acquisition of shares or voting rights or control of a public sector undertaking.

(3) Any competitive offer by an acquirer shall be for such number of shares which, when taken together with shares held by him along with persons acting in concert with him, shall be at least equal to the number of shares for which the first public announcement has been made.

(4) Upon the public announcement of a competitive bid or bids, the acquirer(s) who had made the public announcement(s) of the earlier offer(s), shall have the option to make an announcement:

(a) revising the Offer; or

(b) withdrawing the offer, with the prior approval of the Board:

Provided that if no such announcement is made within fourteen days of the announcement of the competitive bid(s), the earlier offer(s) on the original terms shall continue to be valid and binding on the acquirer(s) who had made the offer(s) except that the date of closing of the offer shall stand extended to the date of closure of the public offer under the last subsisting competitive bid.

(5) The provisions of these Regulations shall mutatis mutandis apply to the competitive bid(s) made under sub‑regulation (1).

(6) The acquirers who have made the public announcement of offer(s) including the public announcement of competitive bid(s) but have not withdrawn the offer in terms of sub‑regulation (4) shall have the option to make upward revisions in his offer(s). in respect to the price and the number of shares to be acquired, at any time up to seven working days prior to the date of closure of the offer:

Provided that the acquirer shall not have the option to change any other terms and conditions of their offer:

Provided further that any such upward revision shall be made only upon the acquirer,

(a) making a public announcement in respect of such changes or amendments in all the newspapers in which the original public announcement was made;

(b) simultaneously with the issue of public announcement referred in clause (a), informing the Board, all the stock exchanges on which the shares of the company are listed, and the target company at its registered office;

(7) Where there is a competitive bid, the date of closure of the original bid as also the date of closure of all the subsequent competitive bids shall be the date of closure of public offer under the last subsisting competitive bid and the public offers under all the subsisting bids shall close on the same date.

26. Upward Revision of Offer

Irrespective of whether or not there is a competitive bid, the acquirer who has made the public announcement of offer may make upward revisions in his offer in respect of the price and the number of shares to be acquired, at anytime upto seven working days prior to the date of the closure of the offer:

Provided that any such upward revision of offer shall be made only upon the acquirer

(a) making a public announcement in respect of such changes or amendments in all the newspapers in which the original public announcement was made;

(b) simultaneously with the issue of such public announcement, informing the Board, all. the stock exchanges on which the shares of the company are listed, and the target company at its registered office;

27. Withdrawal of Offer

(1) No public offer, once made, shall be withdrawn except under the following circumstances

(a) the withdrawal is consequent upon any competitive bid;

(b) the statutory approval(s) required have been refused;

(d) such circumstances as in the opinion of the Board merits withdrawal

(2) In the event of withdrawal of the offer under any of the circumstances specified under sub regulation (1), the acquirer or the merchant banker shall:

(a) make a public announcement in the same newspapers in which the public announcement of offer was published, indicating reasons for withdrawal of the offer,

(b) simultaneously with the issue of such public announcement, inform‑(i) the Board; (d) all the stock exchanges on which the shares of the company are listed; and (iii) the target company at its registered office.

28. Provision of Escrow

(1) The acquirer shall as and by way of security for performance of his obligations under the Regulations, deposit in an escrow account such sum as specified in sub‑regulation (2).

(2) The escrow amount shall be calculated in the following manner,

(a) for consideration payable under the public offer, upto and including Rs. 100 crores‑25%; exceeding Rs. 100 crores‑25%; upto Rs. 100 crores and 10% thereafter,

(b) for offers which are subject to a minimum level of acceptance, and the acquirer does not want to acquire a minimum of 20%, than 50% of the consideration payable under the public offer in cash shall be deposited in the escrow amount.

(3) The total consideration payable under the public offer shall be calculated assuming full acceptances and at the highest price if the offer is subject to differential pricing, irrespective of whether the consideration for the offer is payable in cash or otherwise.

(4) The escrow account referred in sub‑regulation (1) shall consist of,

(a) cash deposited with a scheduled commercial bank; or

(b) bank guarantee in favour of the merchant banker; or

(d) cash, deposited with a scheduled commercial bank in case of clause (b) of sub‑regulation (2) of this Regulation.

(5) Where the escrow account consists of deposit with a scheduled commercial bank, the acquirer shall, while opening the account, empower the merchant banker appointed for the offer to instruct the bank to issue a banker's cheque or demand draft for the amount lying to the credit of the escrow account, as provided in the Regulations.

(6) Where the escrow account consists of bank guarantee, such bank guarantee shall be in favour of the merchant banker and shall be valid at least for a period commencing from the date of public announcement until 30 days after the closure of the offer.

(7) The acquirer shall, in case the escrow account consists of securities empower the merchant banker to realise the value of such escrow account by sale or otherwise provided that if there is any deficit on realisation of the value of the securities, the merchant banker shall be liable to make good any such deficit.

(8) In case the escrow account consists of bank guarantee or approved securities, these shall not be returned by the merchant banker till after completion of all obligations under the Regulations.

(9) In case there is any upward revision of offer, consequent upon a competitive bid or otherwise, the value of the escrow account shall be increased to equal at least 10% of the consideration payable upon such revision.

(10) Where the escrow account consist of bank guarantee or deposit of approved securities, the acquirer shall also deposit with the bank a sum of at least 1% of the total consideration payable, as and by way of security for fulfillment of the obligations under the Regulations by the acquirers.

(11) The Board shall in case of non‑fulfillment of obligations under the Regulations by the acquirer forfeit the escrow account either in full or in part.

(12) The escrow account deposited with the bank in cash shall be released only in the following manner,

(a) the entire amount to the acquirer upon withdrawal of offer in terms of Regulation 27 upon certification by the merchant banker;

(b) for transfer to the special account opened in terms of sub‑regulation (1) of Regulation 29:

Provided the amount so transferred shall not exceed 90% of the cash deposit made under clause (a) of sub‑regulation (2) of this Regulation;

(c) to the acquirer, the balance of 10% of the cash deposit made under clause (a) of sub regulation (2) of this Regulation or the cash deposit made under sub‑regulation (8) of this Regulation, on completion of all obligations under the Regulations, and upon certification by the merchant banker;

(d) the entire amount to the acquirer upon completion of all obligations under the Regulations, upon certification by the merchant banker, where the offer is for exchange of shares or other secured instruments;

(e) the entire amount to the merchant banker, in the event of forfeiture for non‑fulfillment of any of the obligations under the Regulations, for distribution among the target company, the regional stock exchange and to the shareholders who had accepted the offer in the following manner, after deduction of expenses, if any, of the merchant banker and the registrars to the offer

(i) one third of the amount to the target company;

(ii) one‑third of the amount to the regional stock exchange for credit of the investor protection fund or any other similar fund for investor education, research, grievance redressal and similar such purposes as may be specified by the Board from time to time;

(iii) residual one‑third to be distributed pro rata among the shareholders who have accepted the offer.

(13) In the event of non‑fulfillment of obligations by the acquirer, the merchant banker shall ensure realisation of escrow amount by way of foreclosure of deposit invocation of bank guarantee or sale of securities and credit proceeds thereof to the regional stock exchange of the target company, for the credit of the Investor Protection Fund or any other similar fund.

29. Payment of consideration

(1) For the amount of consideration payable in cash, the acquirer shall, within a period of 21 days from the date of closure of the offer, open a special account with a Bankers to an issue registered with the Board and deposit therein, such sum as would, together with 90% of the amount lying in the escrow account, if any, make up the entire sum due and payable to the shareholders as consideration for acceptances received and accepted in terms of these Regulations and for this purpose, transfer the funds from the escrow account.

(2) The unclaimed balance lying to the credit of the account referred in sub‑regulation (1) at the end of 3 years from the date of deposit thereof shall be transferred to the investor protection fund of the regional stock exchange of the target company.

(3) In respect of consideration payable by way of exchange of securities, the acquirer shall ensure that the securities are actually issued and despatched to the shareholders.

CHAPTER IV

BAIL OUT TAKEOVERS

30. Bail out takeovers

(1) The provisions of this Chapter shall apply to a substantial acquisition of shares in a financially weak company not being a sick industrial company, in pursuance to a scheme of rehabilitation approved by a public financial institution or a scheduled bank (hereinafter referred to as lead institution).

(2) The lead institution shall be responsible for ensuring compliance with the provisions of this Chapter.

(3) The lead institution shall appraise the financially weak company taking into account the financial viability, and assess the requirement of funds for revival and draw up the rehabilitation package on the principle of protection of interests of minority shareholders, good management, effective revival and transparency.

(4) The rehabilitation scheme shall also specifically provide the details of any change in management.

(5) The scheme may provide for acquisition of shares in the financially weak company in any of the following manner:

(a) outright purchase of shares, or

(b) exchange of shares, or

Provided that the scheme as far as possible may ensure that after the proposed acquisition the erstwhile promoters do not own any shares in case such acquisition is made by the new promoters pursuant to such scheme.

Explanation.‑For the purpose of this chapter, the expression "financially weak company" means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50% but less than 100% of its net worth as at the beginning of the previous financial year that is to say, of the sum total of the paid‑up capital and free reserves.

31. Manner of acquisition of shares

(1) Before giving effect to any scheme of rehabilitation the lead institution shall invite offers for acquisition of shares from at least three parties.

(2) After receipt of the offers under sub‑regulation (1), the lead institution shall select one of the parties having regard to the managerial competence, adequacy of financial resources and technical capability of the person acquiring shares to rehabilitate the financially weak company.

(3) The lead institution shall provide necessary information to any person intending to make an offer to acquire shares about the financially weak company and particularly in relation to its present management technology, range of product manufactured, shareholding pattern, financial holding and performance and assets and liabilities of such company for a period covering five years from the date of the offer as also the minimum financial and other commitments expected of from the person acquiring shares for such rehabilitation.

32. Manner of evaluation of bids

(1) The lead institution shall evaluate the bids received with respect to the purchase price or exchange of shares, track record, financial resources, reputation of the management of the person acquiring shares and ensure fairness and transparency in the process.

(2) After making evaluation as provided in sub‑regulation (1), the offers received shall be listed in order of preference and after consultation with the persons in the affairs of the management of the financially weak company accept one of the bids.

33. Person acquiring shares to make an offer

The person acquiring shares who has been identified by the lead institution under sub‑regulation 2 of Regulation 32, shall on receipt of a communication in this behalf from the lead institution make a formal offer to acquire shares from the promoters or persons in charge of the affairs of the management of the financially weak company, financial institutions and also other shareholders of the company at a price determined by mutual negotiation between the person acquiring the shares and the lead institution.

Explanation.‑Nothing in this regulation shall prohibit the lead institution offering the shareholdings held by it in the financially weak company as part of the scheme of rehabilitation.

34. Person acquiring shares to make public announcement

(1) The person acquiring shares from the promoters or the persons in charge of the management of the affairs of the financially weak company or the financial institution shall make a public announcement of his intention for acquisition of shares from the other shareholders of the company,

(2) Such public announcement shall contain relevant detail about the offer including the information about the identity and background of the person acquiring shares, number and percentage of shares proposed to be acquired, offer price, the specified date, the date of opening of the offer and the period for which the offer shall be kept open and such other particulars as may be required by the Board,

(3) The letter of offer shall be forwarded to each of the shareholders other than the promoters or the persons in charge of management of the financially weak company and the financial institutions.

(4) If the offer referred to in sub‑regulation (1) results in the public shareholding being reduced to 10% or less of the voting capital of the company, the acquirer shall either

(a) within a period of three months from the date of closure of the public offer, make an offer to buy out the outstanding shares remaining with the shareholders at the same offer price, which may have the effect of delisting the target company; OR

(b) undertake to disinvest through an offer for sale or by a fresh issue of capital to the public which shall open within a period of 6 months from the date of closure of public offer, such number of shares so as to satisfy the listing requirements.

(5) The letter of offer shall state clearly the option available to the acquirer under sub‑regulation (4).

(6) For the purposes of computing the percentage referred to in the sub‑regulation (4), the voting rights as at the expiration of thirty days after the closure of the public offer shall be reckoned.

(7) While accepting the offer from the shareholders other than the promoters or persons in charge of the financially weak company or the financial institutions, the person acquiring shares shall offer to acquire from the individual shareholder his entire holdings if such holding is upto hundred shares of the face value of rupees ten each or ten shares of the face value of rupees hundred each.

35. Competitive Bid

No person shall make a competitive bid for acquisition of shares of the financially weak company once the lead institution has evaluated the bid and accepted the bid of the acquirer who has made the public announcement of offer for acquisition of shares from the shareholders other than the promoters or the persons in charge of the management of the financially weak company.

36. Exemption from the operations of Chapter III

(1) Every offer which has been made in pursuance of Regulation 30 shall be accompanied with an application to the Board for exempting such acquisitions from the provisions of Chapter III of these Regulations.

(2) For considering such request the Board may call for such information from the company as also from the lead institution, in relation to the manner of vetting the offers evaluation of such offers and similar other matters.

(3) Notwithstanding grant of exemption by the Board, the lead institution or the acquirer as far as may be possible, shall adhere to the time limits specified for various activities for public offer specified in Chapter III.

37. Acquisition of shares by a State level public financial institution

Where proposals for acquisition of shares in respect of a financially weak company is made by a State level public financial institution, the provisions of these Regulations in so far as they relate to scheme of rehabilitation prepared by a public financial institution, shall apply except that in such a case of Industrial Development Bank of India, a corporation established under the Industrial Development Bank of India Act, 1964 shall be the agency for ensuring the compliance of these Regulations for acquisition of shares in the financially weak company.

CHAPTER V

INVESTIGATION AND ACTION BY THE BOARD

38. Board's right to investigate

The Board may appoint one or more persons as investigating officer to undertake investigation for any of the following purposes, namely

(a) to investigate into the complaints received from the investors, the intermediaries or any other person on any matter having a bearing on the allegations of substantial acquisition of shares and takeovers;

(b) to investigate suo motu upon its own knowledge or information, in the interest of securities market or investors interests, for any breach of the Regulations;

(c) to ascertain whether the provisions of the Act and the Regulations are being complied with for any breach of the Regulations.

39. Notice before investigation

(1) Before ordering an investigation under Regulation 28, the Board shall give not less than 10 days notice of the acquirer, the seller, the target company, the merchant banker, as the case may be.

(2) Notwithstanding anything contained in sub‑regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing direct that such investigation be taken up without such notice.

(3) During the course of an investigation, the acquirer, the seller, the target company, the merchant banker, against whom the investigation is being carried out shall be bound to discharge his obligation as provided in Regulation 40.

40. Obligations on investigation by the Board

(1) It shall be the duty of the acquirer, the seller, the target company, the merchant banker whose affairs are being investigated and of every director, officer and employee thereof, to produce to the investigating officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to his activities as the investigating officer may require, within such reasonable period as the investigating officer may specify.

(2) The acquirer, the seller, the target company, the merchant banker and the persons being investigated shall allow the investigating officer to have reasonable access to the premises occupied by him or by any other person on his behalf and also extend reasonable facility for examining any books, records, documents and computer data in the possession of the acquirer, the seller, the target company, the merchant banker or such other person and also provide copies of documents or other materials which, in the opinion of the investigating officer are relevant for the purposes of the investigation.

(3) The investigating officer, in the course of investigation, shall be entitled to examine or to record the statements of any director, officer or employee of the acquirer, the seller, the target company, the merchant banker.

(4) It shall be the duty of every director, officer or employee of the acquirer, the seller, the target company, the merchant banker to give to the investigating officer all assistance in connection with the investigation, which the investigating officer may reasonably require.

41. Submission of Report to the Board

The investigating officer shall, as soon as possible, on completion of the investigation, submit a report to the board:

Provided that if directed to do so by the Board, he may submit interim reports.

42. Communication of findings

(1) The Board shall, after consideration of the investigation report referred to in Regulation 41, communicate the findings of the investigating officer to the acquirer, the seller, the target company, the merchant banker, as the case may be, and give him an opportunity of being heard.

(2) On receipt of the reply if any, from the acquirer, the seller, the target company, the merchant banker, as the case may be, the Board may call upon him to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act and the Regulations.

43. Appointment of Auditor

Notwithstanding anything contained in this Regulation, the Board may appoint a qualified auditor to investigate into the books of account or the affairs of the person concerned:

Provided that the auditor so appointed shall have the same powers of the investigating authority as stated in Regulation 38 and the obligations of the person concerned in Regulation 40 shall be applicable to the investigation under this Regulation.

44. Directions by the Board

The Board may in the interests of the securities market, without prejudice to its right to initiate action including criminal prosecution under section 24 of the Act give such directions as it deems fit including:

(a) directing the person concerned not to further deal in securities;

(b) prohibiting the person concerned from disposing of any of the securities acquired in violation of these Regulations;

(d) taking action against the person concerned.

NOTES

SEBI Power to take Remedial Measures

The investors should not be allowed to suffer when there are sufficient provisions under section 111A(3) to rectify the situation. Further, if after examination/investigation, SEBI comes to the conclusion that the shares have been acquired in violation of the SEBI Takeover Code, then under regulation 44 of the said Code, they are also empowered to give necessary directions to take remedial measures. In view of this, we are not inclined to keep these appeals in abeyance, particularly, having regard to the fact that material placed before CLB is found to be inadequate to form an opinion of alleged violation of the said Takeover Code. Further, if these appeals are allowed, the shareholding would go only upto 9.37% which would be below 10% ceiling prescribed at that time under the Code. Azzilifi Finlease & Investments (P.) Ltd. v. Ambalal Sarabhai Enterprises Ltd.. (2000) 1 Comp LJ 118 at p. 126: (2000) 100 Com Cases 355 (CLB).

45. Penalties for non‑compliance

(1) Any person violating any provisions of the Regulations shall be liable for action in terms of the Regulations and the Act.

(2) If the acquirer or any person acting in concert with him, fail's to carry out the obligations under the Regulations, the entire or part of the sum in the escrow amount shall be liable to be forfeited and the acquirer or such a person shall also be liable for action in terms of the Regulations and the Act.

(3) The Board of directors of the target company failing to carry out the obligations under the Regulations shall be liable for action in terms of the Regulations and Act.

(4) The Board may, for failure to carry out the requirements of the Regulations by an intermediary initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act:

Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in the Regulations applicable to such intermediary is complied with.

(5) For any mis‑statement to the shareholders or for concealment of material information required to be disclosed to the shareholders, the acquirers or the directors where the acquirer is a body corporate, the directors of the target company, the merchant banker to the public offer and the merchant banker engaged by the target company for independent advice would be liable for action in terms of the Regulations and the Act.

(6) The penalties referred to in sub‑regulations (1) to (5) may include:

(a) criminal prosecution under section 24 of the Act;

(b) monetary penalties under section 15‑H of the Act,

46. Appeal to the Securities Appellate Tribunal

Any person aggrieved by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999 (i.e., after 16th December, 1999), under these regulations may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.

47. Repeal and Saving

(1) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1993 are hereby repealed.

(2) Notwithstanding such repeal:

(a) Anything done or any action taken or purported to have been done or taken including approval of letter of offer exemption granted, fees collected any adjudication, enquiry or investigation commenced or show cause notice issued under the said regulations shall be deemed to have been done or taken under the corresponding provisions of these regulations;

(b) Any application made to the Board under the said regulations and pending before it shall be deemed to have been made under the corresponding provisions of these regulations;

(c) Any appeals preferred to the Central Government under the said regulations and pending before it shall be deemed to have been preferred under the corresponding provisions of these regulations.

(1)

STANDARDISED FORMATS OF REPORTS/RECORDS, ETC. IN TERMS OF SPECIFIC PROVISIONS OF THE SEBI (SUB-STANTIAL ACQUISITION OF SHARES AND TAKE-OVERS) REGULATIONS, 1997

Under the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997, Acquirer(s), Merchant Banker(s) and Target Companies are required to maintain certain records/to furnish certain information/sports to SEBI/Stock Exchanges in accordance with the specific provisions stipulated in the regulations.

In order to ensure uniformity in compliance of these requirements by all concerned and to enable the concerned persons to furnish all the relevant information in the first instance itself, SEBI has standardized the formats of the following reports/records:

1. Format for filing the information with SEs by acquirer as required under regulation 3(3).

2. Format of report to be filed with SEBI as required under regulation 3(4).

3. Format for filing the information by Acquirer with Target Company as required under regulations 7(1), 8(1) and 8(2).

4. Format of the Register to be maintained by the Target Company in terms of regulation 8(4).

5. Format of due diligence certificate to be furnished by Merchant Ranker in terms of regulation 24(2).

6. Format of 45 days report required to be filed by Merchant Banker with SEBI in accordance with regulation 24(7).

A copy of these formats, are available on our website at, www.sebi.gov.in. With the standardization of these formats, all the concerned persons are advised to maintain records/to furnish the information/report, as applicable, strictly in accordance with these formats, w.e.f. 01‑04‑99.

FORMAT FOR FILING THE INFORMATION WITH STOCK EXCHANGES BY ACQUIRER AS REQUIRED UNDER RULES 3 (3)

Name of the Target Company (T.C.)
Name of acquirer(s) along with PAC (referred together as "acquirers" herein after)
Shareholding/voting rights of acquirer(s) in T.C.	Before the said Acquisition		Proposed after the said Acquisition
	No. of shares	%(shares/ voting rights	No. of shares	%(shares/ voting rights
Type of acquisition (by way of public/ rights/preferential allotment/inter se transfer) Please specify.
In case, the acqusition is by way of inter se transfer as per regulations, disclose names of transferors and their shareholding in T.C. before transfer.
No. and % of shares/voting rights of T.C. proposed to be acquired through the acquisition.
Acquisition price per share
Date of proposed acquisition

ANNEXURE

Format of the report to be submitted to SEBI in terms of regulation 3(4)

1. Format of the captioned reports has been divided into two parts: Part I and Part II.

2. Part I enumerates the details which are common to all type of acquisitions whereas Part II enumerates the details which are specific to the acquisition. There are five forms in Part II (Form A, Form B, Form C, Form Dand Form E).

3. Both the Parts (Part I and Part II (i.e. the specific form)) are required to be filled up and submitted as a single report under Regulation 3(4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 so as to reach SEBI within 21 days of the date of acquisition along with the fee as specified under Regulation 3(5) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

PART I

General Details

Sr. No.	Item	Factual Detail	Comments, if any
I	Date of report		Not Applicable
II	Name and address of sender		Not Applicable
III	Whether sender is acquirer	Yes/No.	If no, whether the person is duly authorised by acquirer to act on his behalf in this regard (enclose copy of such authorisation)
IV	Compliance of reg. 3(4)and3(5) (i)Whether report has been sub mitted to SEBI within 21 days from the date of acquisition reg. 3 (4) (ii)Whether the report stated at (i) is accompanied with filing fees as required under rule 3(5)

Target company Details

Sr. No.	Item	Factual Detail	Comments, if any
I	Name and address of Target Company		Not Applicable
II	Name of Stock Exchange(s) where shares of Target company are listed
III	Opening and Closing price of shares as on date of acquisition (indicate name of stock exchange)		In case, no quotation was available on that parlicular date, give the last quoted price available alongwith date.
IV	Total paid‑up capital in terms, of Number of shares/voting rights, (a) Before acquisition of shares/voting rights under consideration (b) After acquisition of shares/voting rights under consideration

Acquirers' Details

Please Note: Unless otherwise stated Acquirer along with persons acting in concert with him would be taken as "acquirer" hereinafter.

Sr. No.	Item	Comments, if any
I	Name' and Address of acquirer(s) (regarding persons acting in concert with the main acquirer, give only names of PAC) Identify the main acquirer and he must be authorized by other PAC to file a report with SEBI. Any fiirther correspondence by SEBI regarding the acquisition will be done with the main Acquirer
II	In case, the acquirer is a company, identify its promoters or persons having control over the said company and the group they belong to.
III	Shareholding of acquirer in target company in terms of No. and % of shares of target company) (a) Before the acquisition under, consideration (b) After the acquisition under consideration
IV	Mention of regulation [10, 11(1), 11(2) or 12] which would have been triggered off, had the report not filed under Regulation 3(4). Explain by giving pre and post‑acquisition holding of shares/voting rights/ control over the target company or by giving the % shares/voting rights acquired.

Category of the Acquisition/Transaction

Sr. No.	Item	Comments, if any
1.	Specify the sub‑regulation/sub‑clause under Regulat- ions 3, to which the transaction falls.

PART II

FORM A

For transaction fafling under regulation 3(1)(a)‑allotment pursuant to an application made to a public issue

Sr. No.	Item	Factual/information/disclosure given	Comments on compliance of Regulatory requirements Write "Complied with/not complied with" if applicable.
I	Date of allotment		Not Applicable
II	Acquisition price per share		Not Applicable
III	No. and percentage of shares of T.C. are acquired		Not Applicable
IV	In case, the acquisition is by wayof application made in public issue 1. Indicate No. and % of shares applied for vis‑a‑vis No. and % of shares acquired.
V	In case, the acquisition is by way of firm allotment made in public issue 1. Indicate No. and % of shares acquired. 2. Indicate whether full disclosure about the following was given in the prospectus: (a) Identity of acquirer (b) Consequential changes:. (i) in voting right (ii) in Shareholding pattern(iii) In Board of Directors (c) Purpose of acquisition.	Reproduce the relevant portion from the prospectus against each disclosure.	Comments as to how in your view, you have satisfied the provision of said regulation?

Other requirements

(a) A statement from acquirer, that information given in the report is true and correct.

(b) The report shall be signed by the acquirer mentioning date and place. In case, there are

more than one acquirer, th~n either all of them should sign or one person who has been

duly authorised by others, should sign on behalf of others.

Supporting Documents

A copy of the prospectus with the relevant portion duly highlighted, should be. sent along with, the report.

FORM B

For transaction falling‑under regulation 3(1)(b)‑allotment in pursuant to an application made in right issue

Sr. No.	Item	Factual/Information/disclosure given	Comments on compliance of Regulatory requirements Write "Complied with/not complied with" if applicable.
I	Date of allotment		Not Applicable
II	Acquisition price per share		Not Applicable
III	Details of rights issue‑ (a) No. of shares issued (b) Ratio (c) Price per share		Not Applicable
IV	Pre‑issue holding of acquirer in target company (in terms of No. of shares and %)		Not Applicable
V	Extent of rights entitlement of acquirers (No. and %) (% w.r.t. No. of shares issued in rights issue)		Not Applicable
VI	No. and % of shares acquired in rights issue		Not Applicable
VII	Whether (vi) is to the extent of rights entitlement of acquirer specified at (v) above.	Yes/No.
VIII	If (vii) is No. indicate No. and %of shares acquired over and above the rights entitlement		Not Applicable
IX	Whether the No. and % shares mentioned at (VIII) is within the limits specified in Regulation 11	Yes/No.
X	In (ix) is No, disclose the following: 1. Whether the said acquirer wasin control over the company before rights issue. 2. Whether the intention to acquire additional shares beyond their entitlement, if the issue is under subscribed, was disclosed in the Letter of offer.	Explain how the said acquirer is, stated to be in control over the company. Reproduce the relevant disclosure from the letter of offer.	Explain as to how you have satisfied the provisions contained in the Regulations.
XI	Has there been any change in control of management of the company pursuant to this acquition	Yes/No with reasons

Other requirements

(a) A statement from Acquirer that information given in the reports is true and correct.

(b) The report shall be signed by the acquirer mentioning date and place. In case, there are more than one acquirer, then either all of them should sign or one person who has been duly authorised by others, should sign on behalf of others.

Supporting document:

A copy of the Letter of Offer with the relevant portion highlighted, should be sent alongwith the report.

FORM C

For transaction falling under regulation 3(1)(c)‑preferential allotment in pursuant to a resolution passed under section 81 (1a) of the companies act, 1956

Sr. No.	Item	Factual Information/disclosure given	Comments on compliance of Regulatory requirements Write "Complied with/not complied with" if applicable.
I	Date when Board resolution was passed for approving the preferential allotment		Not Applicable
II	Whether copy of the above Board resolution was sent to all Ses where shares of Target company are listed for being notified on the notice Board Reg. 3(1)(c)(i)		Indicate date when it was submitted to SEs and confirm compliance of Reg. 3(1)(c)(i)
III	Date when Shareholders' meeting was held to pass a resolution under section 81 (1A) of the Companies Act to approve the preferential allotment		If the resolution was not passed/passed with modific- ations, please indic- ate so giving details of modificat- ions, if any.
IV	Pre‑issue holding of acquirer in target company (in terms of No. of shares and %)		Not applicable
V	Details of preferential allotment 1. Total No. and % of shares proposed to be allotted 2. No. and % of shares proposed to be allotted to acquirer.
VI	Acquisition price per share		Whether in accordance with SEBI preferential offer guidelines dated August 4,1994.
VIIA	Disclosures given in the notice sent to hareholders for the above meeting 1. Identity of the class of proposed allottee(s) 2. Identity of allottee(s) 3. Price at which allotment is proposed. 4. Purpose of and reason for such allotment 5. Consequential changes if any in- (a) Board of Directors (b) Voting rights (c) Shareholding pattern 6. Whether such allotment would result in any change in control over the company	Indicate the disclosure given in the notice for the
VIIB	Whether SEBI's Preferential Offer Guidelines dated August 4, 1994 have been complied with
VIII	Date of allotment
IX	Whether information about the proposed acquisition was given to all SEs where the shares of target company are listed at least 4 working days in advance of the proposed acquisition ‑ Reg. 3(3)	Yes/No	Date when it was submitted to SEs Confirm compliance of Reg. 3(3).

Other requirements

(a) A statement from Acquirer that information given in the reports is true and correct.

Supporting Document:

A copy of the Notice of the General Meeting called for the purpose of the preferential allotment with the relevant portion highlighted, should be sent along with the report.

FORM D

For transactions falling under regulation 3(1)(e)‑inter se transfer of shares

Please writ NOT APPLICABLE for the sub‑clause which is not applicable in your case.

Sr. No.	Item	Factual Information/ disclosure given	Comments on compliance of Regulatory requirements Write "Complied with/not complied with" if applicable.
I	Date of inter se transfer (acquisition)
II	Acquisition price per share
III	Specify the sub‑clause of reg. 3(1)(e) to which the said transaction falls	3(1)(e)(i)/ 3(1)(e)(ii)/ 3(1)(iii)
IV	In case, the transaction belongs to sub‑clause (i) 1. Give names of transferors and transferees; 2. Indicate by citing the relevant section of MRTP Act, 1969 as to how transferor and transferee can be classified as group companies within the definition of 'group' as defined in MRTP Act, 1969.
V	In case, the transaction belongs to sub‑clause (ii), 1. Give names of transferors and transferees. 2. Indicate by citing the relevant sub‑section of section 6, and also the relation, as to how the transferor and transferee can be classified as relatives within the meaning of section 6 of the Companies Act, 1956.
VI	In case, the transaction falls under sub‑clause (iii)(a) and (b) 1. Explain as to how the transferor and transferee can be termed as promoters (cite relevant section of Regulation 2(h) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. 2. Name of the transferee(s) (Acquirers) and their shareholding/voting rights in Target company for the last three years as on 31^st March each year in terms of No. and % of shares/voting rights of target company. 3. Name of the transferor(s) and their share-holding/voting rights in Target company for the last three years as on 31^st March each year in terms of No. and % of shares/voting rights of target company. 4. Also furnish a statement confirming the following: (a) the transferor(s) have been holding individually or collectively not less than 5% shares in target company for a period of at least three years prior to the date of acquisition (b) the transferee(s) have been holding individually or collectively not less than 5% shares in target company. For a period of at least three years prior to the date of acquisition.
VII	Whether the transferee(s) have filed the declaration with the Target company in accordance with Chapter II of the SEBI (Substantial Acquisition of Shares and Take overs) Regulations, 1997 and whether the company has filed the same with all SEs where shares of the Target company are listed.	Yes/No	Forward copies of the declaration filed and confirm compliance of applicable regulations of Chapter II.
VIII	Whether information about the proposed acquisition was given to all SEs where the shares of Target Company are listed atleast 4 working days in advance of the proposed acquisition ‑ Reg. 3(3)	Yes/No	Indicate the date when information was given to SEs and confirmation regarding compliance of regulation 3(3)

Other requirements

A statement from Acquirer that information given in the reports is true and correct.

The report shall be signed by the acquirer mentioning date and place. In case, there are more than one acquirer, then either all of them should sign or one person who has been duly authorised by others, should sign on behalf of others.

Supporting Document:

A copy of the declarations filed by acquirer with the Target Company and a letter from Target Company that the said information has been filed with SEs within the stipulated time, i.e., Chapter II requirements are complied with, should be sent along with the report.

FORM E

For transactions falling under regulation 3(1)(i)‑Transfer of shares of target company from State level financial institutions (SLFIs) or its subsidiaries to co‑promoters of the target company.

Sr. No.	Item	Factual Information/ disclosure given	Comments on compliance of Regulatory requirements Write "Complied with/not complied with" if applicable.
I	Date of transfer		Not Applicable
II	Acquisition price per share		Not Applicable
III	(a) Name of the Transferor(s) (b) Confirm whether it is State Level Financial Institution or its subsidiary.
IV	If the transfer is pursuant to an agreement, mention (a) date of the agreement (b) relevant contents of the agreement	Reproduce the relevant portion from the agree ment
V	Whether acquirer is promoter or co‑promoter as per definition given in Reg. 2(h) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Cite the relevant section.
VI	Whether information about the proposed acquisition was given to all SEs were the shares of Target company are listed at least 4 working days in advance of the proposed acquisition ‑ Reg. 3(3)	Yes/No	Date when it was sub mitted to SEs and confirmation regarding compliance of Reg. 3(3).

Other requirements

A statement from Acquirer that information given in the report is true and correct.

Supporting Document:

A copy of the relevant portion of agreement duly highlighted, should be sent along with the report.

Annexure I

The disclosures which are required to be given in the notice of the General Meeting (called for the purpose of consideration of the preferential allotment) in accordance with Regulation 3(1)(c)(ii) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, shall be as per the following format:

I. Allottee Details :

(a) Name of the Allottee(s) and its relation, if any, with the existing promoters or persons in control over the Target company (T.C.) Names of persons deemed to be acting in concert with the allottee (all refeffed as "Acquirer" hereinafter) who will be holding more than 5% in T.C. shall also be disclosed.

In case, the allottee(s) is a company, identify its promoters or persons in control over the company and the group they belong to, if any.

II. Acquisition Details

(a) No. and % of shares proposed to be allotted pursuant to special resolution passed under section 81 (1A) ‑ preferential allotment.

(b) No. and % of shares proposed to be allotted to each of the allottee(s) mentioned at (i) above.

Note:

% to be calculated w.r.t. expanded capital (post acquisition capital).

Note:

1. The actual price shall be mentioned in the notice along with the statement that the same is in accordance with SEBI Preferential Offer Guidelines dated 4‑8‑94.

2. In case, an instrument convertible into shares (Cls) i.e., FCDs/PCDs/ OFCDs/warrants, etc., is proposed to be issued:

(i) mention the price at which the Cls is issued,

(ii) mention the price at which the CIs would be converted into equity shares.

(iii) disclose features of the instrument (conversion pd. conversion price, redemption pd. etc.)

(iv) Terms of payment.

(In case, the issuer wants to fix the relevant date, 30 days prior to the date on which CI holder becomes entitled to apply for the said shares, this intention shall be disclosed clearly. In this regard, please refer to SEBI preferential offer guidelines dated 4‑8‑94]

(d) Purpose of and reason of the said allotment.

(e) Consequential changes, if any, in Board of Directors

Note:

A specific statement indicating the No. of directors out of the total No. of directors proposed to be inducted in Board of Directors (BOD) of Target Company (T.C.) after preferential allotment shall be given. In case no change in BOD is envisaged, a specific statement to that effect shall be incorporated.

(f) Consequential changes, if any, in the Pre‑allotment in Post‑allotment

share‑holding pattern of the terms of shares in terms of

Target Company No. % shares No. %

1. Promoter group

(a) Acquirer(s)

(b) Others

2. Acquirer(s)

3. MFs/FIIs/FIs

4. Public

Total paid‑up equity capital of Target company

Notes:

(a) Give shareholding under 1(a) or (2) as the case may be, for each acquirer having 5% or more in the post acquisition capital, separately.

(b) In case, convertible instruments (CIs) are proposed to be allotted, the post‑ acquisition capital shall take into account the "post conversion capital"

(c) In case, there are any outstanding CIs besides the one which are proposed to be allotted, they shall also be taken into account for determining the postacquisition capital.

(d) Acquirer's holding should also take into account any outstanding CIs, in their name.

(g) Consequential changes, if any, in voting rights

1. Promoter group

(a) Acquirer(s)

(b) Others

2. Acquirer(s)

3. MFs/FIIs/FIs

4. Public

Note:

A specific statement that voting rights would change in tandem with shareholding pattern shall be mentioned, if that is so. Otherwise a suitable categorical statement shall be made.

(h) Whether the said allotment would result in change in control over the company.

Note:

A specific statement to this effect shall be mentioned.

Format for informing details of acquisition to target company in terms of regulation 7(1)

Name of the Target Company (T.C.)
Name of the acquirer
Shareholding/holding of Voting rights (VR) before acquisition under consideration	No. of shares	% of shares/voting rights to total paid up capital of Target Company
Shares/voting rights acquired
Shareholding/holding of VR after acquisition
Mode of acquisition (market pur-chase/public issue/rights issue/ pref.
allotment/inter se transfer etc.). Please specify Date of acquisition of shares/ VR on date of receipt of intimation of allotment of shares, whichever is applicable.

Format for informing details of shareholding to target company, in terms of regulation 8(1) and 8(2)

1. Name of Target company
Names of following persons: (a) Name of person holding more than 15% shares or voting rights. (b) Name of promoter or every person having control over a company and also names of persons acting in concert with him.
	No. of shares	% of shares/voting rights to paid paid-up capital of T.C.
3. Shareholding/voting rights of persons mentioned at (a) above (as on March 31^st of the year.) Specify year.


* Shareholding or voting rights held by persons mentioned at (b) above [as on March 31^st/on the record date in accordance with Regulations]. Specify year/date.

Format of the register to be maintained by listed companies under regulation 8(4) of SEBI

(Substantial Acquisition of Shares and Takeovers) Regulations, 1997

I. Format for maintaining the information furnished to the Listed Company in accordance with Regulation 7(1).

Sr. No,	Name of acq uirer	No. and % of shares or voting rights if any, held by acquirer prior to acquisition	No. and % of shar-es or vot- ing rights acquired by acquirer	Date of acquisi tion/date of receipt of intimation of allotment of shares stated at (a) to acquirer(s)	No. and % of aggregate shares or votin rights held after acquisition stated at (d)	Whether in formed to company within 4 working days from (e) (Yes/No.). Specify date.	Whether infor mation sent to SEs within 7 days of receipt of information at (g) (Yes/No.). Specify date.
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)
No. of days(h)- (g)		IF(i> 7 days, reason for delay
(i)		(j)

Note:

(i)If Acquirer(s) is a company, give name of its promoters and persons having control of that company.

(ii)Percentage to be calculated with respect to total paid‑up capital/total voting rights of the target company.

II. Format for maintaining the information furnished to the listed company in accordance with Regulation 8(1) and (2)

Specify whether disclosure is as on March 31 _____ (Specify the financial year) or as on the record date ____ (Specify the record date). [i.e., both are status dates].

Sr. No.

Name of

(a) Promoter(s) or person(s) having control over the company

(b) Person who holds more than 15% shares or voting rights in the company

No. and % of shares or voting rights held by each person(s) under (B)(a) /(B)(b) individually and collectively for persons acting in concert with him.

Whether informed by (b) to company within 21 days from the status date (Yes/No)

Whether information given to SEs by company within. 30-days from the status date (Yes/No) Specify date when informa tion sent to- SEs

No. of da ys (E) -(sta-tus date)

If (F >30 days, rea sons for delay,

(A)

(B)

(C)

(D)

(E)

(F)

(G)

Notes:

(i) If promoter or persons having control over the company under reference is also a company, then give name of its promoters and persons having control of it.

(ii) Percentage to be calculated with respect to total paid up capital/total voting rights of the target company.

45 days report in respect of open offer made by (acquirer) for acquiring shares of (target company)

(Offer formalities completed Yes/No)

(To be submitted in duplicate within 45 days from the closure of the open offer)

1. Name of the Target Company:

2. Name of Acquirer(s):

3. Name of Manager to the offer:

4. Name of the Registrar to the offer, if any:

5. Offer Details

(a) Date of opening of the offer:

(b) Date of closure of the offer

(d) Date by which LOO were actually dispatched.

(e) In case, (d) was later than (c), give reasons for non‑compliance with relevant regulation

(f) Offer price in first.P.A. Revisions, if any

(g) Mode of payment of consideration: Cash/Securities

(h) Offer size in first P.A. Revisions, if any:

(No. of shares x price per share)

(i) Offer price of partly paid‑up shares

6. Details of basis of acceptance

(a) No. of shares proposed to be acquired through open offer, revisions, if any:

(b) No. of applications and shares received [Indicate (b) as a % of (a)]:

(d) No. of fully paid‑up shares received:

(e) No. of fully paid‑up shares accepted

(f) No. of partly paid‑up shares received:

(g) No. of partly paid‑up shares accepted:

7. Last date of completion of the despatch of consideration to respondents in terms of regulations.

8. Actual date of completion of the despatch of consideration to respondents.

9. In case (8) is later than (7), give reasons for delay.

10. Confirm whether consideration has been paid to all the shareholders whose shares have been accepted. If no, give reasons.

11. Name of the bank where the special account has been opened for the purpose of payment of consideration and a certificate from it that the entire amount of consideration has been deposited therein as on _____

12. Escrow account details:

(a) In case, escrow account consists of cash deposit, indicate when, how and for what purpose of the amount deposited in escrow account was released [refer Regulation 2802)].

(b) In case, escrow account consists of Bank Guarantee (BG) deposit of securities,

whether BG/securities have been returned to acquirer(s)

(i) If yes, when and why

(ii) If no, why

13. Post offer details (Actual Versus proposed)

S.No.	Item	Proposed in the Offer document		Actuals
1.	Office price
2.	Shareholding of acquirer (No. and %) before MOU/P.A.
3.	Shares acquired by way of MOU or market purchases (No. and %)
4.	Shares acquired in the open offer (No. and %)
5.	Size of the open offer (No. of shares multiplied by offer price per share)
6.	Shares acquired after P.A. but before 7 working days prior to closure date, if any (No. and %)
7.	Post offer shareholding of acquirer (No. and %)(2+3+4+6)
8.	Pre and Post offer shareholding of Public(No. and %)	Pre offer	Post offer	Pre offer	Post offer

Give details regarding acquisition mentioned at (6) above, if any.

(a) Name of the entity who acquired the shares.

(i) Whether disclosure about the entity stated at (i) was given in the letter of offer as either acquirer or persons acting in concert with Acquirer (Yes/No)

(ii) No. of shares acquired per person mentioned at (i).

(iii) Purchase price per share

(iv) Mode of acquisition

14. Indicate whether the public shareholding has fallen to 10% or less (Yes/No).

15. If yes, indicate the steps taken in accordance with the disclosures given in the offer document.

16. Indicate market price (opening and closing prices) of shares of target company, if traded on the following dates (indicate name of stock exchange(s) also);

(a) Offer closing date

(b) The average market price of the weekly high and. low of the closing prices of the shares during the period from the date of PA till closure of the offer.

17. Any other relevant information.

Date: _____________ ___________________________

Place: _____________ Signed by the Manager to the offer

Note: Submitting 45 days report is the responsibility of Manager to the offer may delay in submission would be viewed seriously by SEBI.

FORMAT OF DUE DILIGENCE CERTIFICATE

Securities and Exchange Board of India,

1^st Floor Mittal Court, ,

Nariman Point, Mumbai 400 021.

Dear Sirs,

Sub: Open offer to acquire up to (No. and % shares) of (Target company (T.C.) by ________ (acquirer along with persons acting in concert with him) at a price of Rs. ____ per fully paid up shares and at a price of Rs. ____ per partly paid up shares (if applicable).

1. The (Acquirer) vide its letter dated ______ has appointed us, as the Merchant Banker to the captioned offer, in terms of Regulation 13 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof.

2. The Public Announcement (P.A.) for the captioned offer in terms of Regulation 15 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (referred as "Takeover Regulations" herein after) was made by us, on behalf of acquirers, on___

3. In this regard, we, the Merchant Banker, have examined various relevant documents and confirm that:

(a) the acquirer is able to implement the offer.

(b) the escrow account in terms of regulation 28 was created on or before P.A.

(d) Firm financial arrangements are in place to fulfill the obligation under the offer.

(e) Contents of P.A. as well as Letter of Offer (LOO) are true, fair and adequate and are based on "reliable" sources.

4. We also confirm that

(a) We are a Merchant Banker holding a certificate of registration granted by SEBI and till date our registration is valid.

(b) We are not associate of or group of the acquirer or the Target company.

(c) The P.A. and the draft LOO forwarded to SEBI is in conformity with Takeovers Regulations and the disclosures made in P.A. and also in draft LOO/final LOO are true, fair and adequate to enable the investors to make a well intoned decision:

(d) All the intermediaries named in the P.A./LOO are registered with SEBI and till date

such registration is valid.

5. As a Merchant Banker, it shall be our duty to ensure compliance with the Takeover Regulations and any other laws or rules as may be applicable, in this regard.

6. Annexed herewith, also find the information furnished in accordance with SEBI circular RMB (GI Series) No. 2 (97‑98).

Date: ____________ ________________

Place: ____________ Manager to the offer

with his/their seal.

(2)

FORMAT OF STANDARD LETTER OF OFFER FOR AN OPEN OFFER IN TERMS OF THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 AND SUBSEQUENT AMENDMENTS THEREOF

Regulation 18(1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 requires an acquirer to file, through its merchant banker, a draft letter of offer with SEBI, containing disclosures as specified by SEBI.

In order to ensure uniformity in compliance of all the requisite requirements regarding disclosures in a letter of offer and to enable to furnish all the relevant information in the first instance itself, SEBI has standardised the format of a letter of offer specifying the minimum disclosures to be given.

The format of the standard letter of offer is given below. The merchant bankers are advised to file the draft of a letter of offer in accordance with this format, with effect from 10 August, 1999.

GENERAL INSTRUCTIONS

1. The purposes of this standard letter of offer for an open offer made in accordance with Chapter III of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof is to provide the requisite information about the acquirer(s)/offer so as to enable the shareholders to make an informed decision of either continuing with the target company or to exit from the target company. Care shall be taken by the merchant banker (MB) to ensure that the Letter of Offer (LO) may not be sophisticated in legal or financial jargons, but it shall be presented in simple, clear, concise and easily understandable language,

2. This standard LO enumerates the minimum disclosure requirements to be contained in the LO of an open offer. The MB/acquirer is free to add any other disclosure(s) which in his opinion is material for the shareholders, provided such disclosure(s) which in his opinion is material for the shareholders, provided such disclosure(s) is not presented in an incomplete, inaccurate or misleading manner and is made in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof.

3. The standard LO prescribes only the nature of‑the disclosures that should be contained under various heads in the LO and is not intended to describe the language to be contained therein.

4. All the financial data shall be in terms of rupees lakhs unless required otherwise (e.g. EPS). When financial data pertains to an overseas entity, the rupee equivalent shall be disclosed in terms of Rs. lacs and the basis of conversion shall also be disclosed. (If so desired, such data may also be disclosed in terms of the monetary unit applicable for that overseas entity).

5. Unless otherwise specified:

(i) Reference to shares (as defined in regulations 2(1)(k)) shall mean reference to fully paid up shares.

(d) Information contained in LO shall be as on the date of the public announcement (PA).

(iii) The 'regulations' shall means SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof.

(iv) The merchant banker to the offer (MB) would mean the merchant banker appointed by the acquirer in terms of regulations 13.

(v) The registrar to the offer, if appointed, would mean an entity registered with SEBI under SEBI (Registrars to an Issue and Share Transfer Agents) Rules and Regulations, 1993.

6. All the requisite disclosures/statements in respect of the acquirer(s), persons who are acting in concert with the acquirer for the purpose of the offer (PACs) and persons who are deemed to be acting in concert with the acquirers for the purposes of the offer (PACs) shall be made in the LO.

7. The Form of Acceptance cum Acknowledgement should be with a perforation.

8. The source from which data/information is obtained should be mentioned in the relevant pages of LO.

9. MB shall ensure the following:

(a) The specified date shall not be later than 30th day from the PA date (inclusive of PA date);

(b) The offer closing date shall be the 30th day from the offer opening date (inclusive offer opening date);

(c) The date by which the acceptance/rejection of the offer would be intimated and the corresponding payment for the acquired shares and/or the share certificate(s) for the rejected shares will be dispatched, shall be within a period of 30 days from the offer closing date.

10. MB shall submit the due diligence certificate in terms of regulations to SEBI along with the draft LO as per the Standardised format.

FORMAT OF THE STANDARD LETTER OF OFFER

The sequence of presentation in LO shall be as under:

Cover pages

1. Disclaimer clause [see page 00, infra]

2. Details of the offer [see page 00, infra]

3. Background of the acquirer(s) (including PACs, if any) [see page 00, infta]

4. Background of the target company [see page 00, infra]

5. Offer price and financial arrangements [see page 00, infra]

6. Terms and conditions of the offer [see page 00, infra]

7. Procedure for acceptance and settlement of the offer [see page 00, infra]

8. Documents for inspection [see page 00, infra]

9. Declaration by the Acquirer(s) (including PACs, if any) [see page 00, infra]

Cover pages

Cover pages shall be white with no patterns or pictures printed on it except emblems/logo, if any, of the acquirer company/MB/Registrar, if any.

(a) Front outer cover page shall contain the following details:

(i) On top:-

"This document is important and requires your immediate attention. This Letter of offer is sent to you as a shareholder(s) of ________ (name of the target company). If you require any clarifications about the action to be taken, you may consult your stock broker or investment consultant or MB/Registrar to the offer (the

latter only if appointed). In case you have sold your shares in the company, please hand over this LO and the accompanying Form of Acceptance cum acknowledgement and transfer deed to the member of stock exchange through whom the said sale was effected."

(ii) In middle in a box:

(a) Name and address of the acquirer(s) (including names of PACs, if any, with him).

(b) Name and address of the registered office of the target company.

(c) Number and percentage of equity shares of target company proposed to be acquired by acquirer(s) through the open offer. Ensure that % is calculated and disclosed w.e.f. total voting capital of the target company.

(d) Offer price per share in terms of rupees. Indicate separately the offer price for fully paid up equity shares as well as partly paid up equity shares, if any, of the target company. Disclose the mode of payment (i.e., cash, exchange of securities, etc. in terms of regulation 20(1)(b), (c)and(d)). Where the offer price is by way of exchange of securities, etc., the disclosures should be made accordingly.

(e) A statement that offer is pursuant to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereof.

(f) If the offer is conditional, specify conditions viz., minimum level of acceptance, differential pricing, if any.

(g) If the offer is a competitive bid, mention that the competitive offer is made pursuant to an open offer made by the original bidder (name).

(h) Mention the statutory approval(s), if any, required to implement the offer and its current status.

(i) A statement that upward revision/withdrawal, if any, of the offer would be informed by way of P.A. in the same newspapers where the original P.A. has appeared. Indicate the last date for such revision (regulation 26). Also mention that the same price would be payable by the acquirer(s) for all the shares tendered anytime during the offer.

(j) A statement that a copy of LO (including Form of Acceptance cum Acknowledgement) is also available on SEBI's web‑site (www. sebi.gov.in)

(iii) At the bottom:

(a) The name of MB and address of the dealing office of MB along with its telephone, fax number and email address, contact person.

(b) The name and address of the Registrar to the offer, if any, along with its telephone, fax number and email address, contact person.

Public announcement (PA) date
Specified date
Date by which Letter of Offer will be despatched to the shareholders
Offer opening date
Offer closing date
Date by which the acceptance/rejection would be intimated and the corresponding payment for the acquired shares and/or the share certificate for the rejected shares will be despatched [Refer item 7.2(iii)].

(b) Front inside cover page shall contain the following:

(i) On top:

An index as follows:

1. Disclaimer clauses

2. Details of the offer

3. Background of the acquirer(s) (including PACs, if any)

4. Background of the target company

5. Offer price and financial arrangements

6. Terms and conditions of the offer

7. Procedure for acceptance and settlement of the offer

8. Documents for inspection

9. Declaration by the acquirer(s) (including PACs, if any)

(ii) At the bottom:

Definitions of the specialised terms used in the LO for easy understanding by the shareholders, viz., target company, acquirers, PACs, regulations, etc. No other terms should be used in the LO for entities defined as such in the regulations. [e.g., the word offer or(s) should not be used to refer the term acquirer(s)].

1. Disclaimer clause

The following on the first page of LOO:

"IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE DRAFT LETTER OF OFFER HAS BEEN SUB-MITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS. THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF (NAME OF THE TARGET CO.) TO TAKE AN INFORMED DECISION WITH REGARD TO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER(S), PACS OR THE COMPANY WHOSE SHARES/CON‑TROL IS PROPOSED TO BE ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE ACQUIRER(S) IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MERCHANT BANKER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT ACQUIRER(S) DULY DISCHARGES ITS RESPONSIBILITY ADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, THE MERCHANT BANKER (INDICATE NAME) HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED TO SEBI IN ACCORDANCE WITH THE SEBI (SUB-STANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997 AND SUBSEQUENT AMENDMENT (S) THEREOF. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRER (S) FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCE AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER."

2. Details of the offer

2.1 Background of the offer:

1. Mention the regulation (10, 11 (1), 11 (2), 12, 25 (1) and (33) in accordance with which the offer is made i.e., mention whether the offer is made for substantial acquisition of shares or consolidation of holdings and/or change in control or competitive bid or is towards bail out takeover.

2. Details of the proposed acquisition (substantial acquisition of shares/voting rights or change in control or both) which triggered the open offer such as name(s) of acquirer(s) and of PACs, their existing shareholding in the target company, whether it was a negotiated deal ‑origpen market purchase(s), acquisition price per share (highest and average), number and percentage of shares acquired.

3. In case there is any agreement, mention important features of the agreement(s) including those pertaining to regulation 22(16), acquisition price per share (highest and average as well as separately for fully paid and partly paid up), number and percentage of shares to be acquired under the agreement, name of the seller(s), names of parties to the agreement, date of agreement, manner of payment of consideration, proposed change in control, if any, etc.

4. Whether the proposed change in control is through an agreement. Give salient features of the arrangement.

5. Proposed change, if any, in Board of Directors after the offer, mentioning names of the directors representing acquirers.

2.2 Details of the proposed offer:

1. Mention names, dates and editions of the newspapers where the public announcement made in accordance with regulation 15 appeared.

2. Indicate the number and percentage of shares proposed to be acquired by the acquirers from the existing shareholders and the mode of payment of consideration, if it is in cash, then the offer price per share shall be mentioned, if by way of exchange of shares/ secured instruments, then, inter alia, the exchange ratio to be disclosed in terms of regulation 20(5).

3. In case, there are fully paid up and partly paid up shares, offer price for both shall be mentioned separately.

4. Differential price, if any, in accordance with Explanation 3 to regulation 20.

5. In case of competitive bids, the competitive bidder shall also disclose the following details:

"The fact that his offer is a competitive offer made pursuant to the open offer made by the original bidder details of the original offer such as name of the original acquirer(s), name of the merchant banker, number and % of shares bid for, offer price, mode of payment, opening date. Any other relevant information including that under rule 25(3)."

6. In case of the conditional, offer specify the following:

"Minimum level of acceptance (No. and % of shares) Differential price, if any, in accordance with Explanation 4 to regulation 20."

7. Disclose details of further acquisition(s), if any, by acquirer(s)/ PACs after the date of P.A. and upto the date of LO viz., No. and % of shares acquired, mode and acquisition price, etc.

3. Background of the acquirer (including PACs, if any)

(In case, the open offer is for the change in control of the target company or is an offer where the offer price is payable in terms of exchange of securities, details under this heading shall be given as per Annexure I. In all other cases, the following details shall be furnished).

3.1 If acquirer(s) (including PACs) is a company.

1. Name and address of the company(ies).

2. The relationship, if any, existing between them.

3. Salient features of the agreement, if any, entered between them with regard to the offer/acquisition of shares.

4. Brief history and major areas of operations.

5. Identity of the promoters and/or persons having control over such companies and the group, if any, to which such companies belong to.

6. Names and residential addresses of Board of Directors of acquirer (s). Confirm whether any of such director(s) is already on the Board of Directors of target company. If so, disclosures in terms of regulation 22(9).

7. Brief audited financial details for a period of last three years. The subsequent certified financial data should also be disclosed so that the financials are not older than six months from the P.A. date.

(Amount Rs. in lakhs)

Profit and loss statement	Year I	Year II	Year III
Income from operations
Other income
Total income
Total expenditure
Profit before depreciation interest and tax
Depreciation
Interest
Profit before tax
Provision for tax
Profit after tax

Balance sheet statement	Year I	Year II	Year III
Sources of funds
Paid up share capital
Reserves and surplus (including revaluation reserves)
Networth
Secured loans
Unsecured loans
Total
Uses of funds
Net fixed assets
Investments
Net current assets
Total miscellaneous expenditure not written off
Total
Other financial	Year I	Year II	Year III
Dividend (%)
Earning per share
Return on networth
Book value per share

3.2 If acquirer(s) (including PACs, if any) is an individual:

1. Name(s) and address(es) of each individual.

2. The relationship, if any, existing between them.

3. Salient features of the agreement, if any, entered between them with regard to the offer/ acquisition of shares.

4. Principal areas of business and relevant experience.

5. Networth duly certified by a Chartered Accountant.

6. Positions held on the Board of directors of any listed company(ies).

7. Name(s) of the company where individual is a full time director.

3.3 Disclosure in terms of regulation 16(ix).

3.4 Option in terms of regulation 21(3), if applicable.

If the public offer results in public shareholding being reduced to 10% or less of the voting capital of the company, or if the public offer is in respect of a company which has public shareholding of less than 10% of the voting capital, disclose the option which the acquirer would exercise in terms of regulation 21(3).

4. Background of the target company

1. Brief history and main areas of operations.

2. Share capital structure of the target company.

Paid up equity shares of target company	No. of shares/voting rights	% of shares/ voting rights
Fully paid up equity shares
Partly paid up equity shares
Total paid up equity shares
Total voting rights in target company

3. Indicate whether there are any outstanding convertible instruments (warrants/FCDs/PCDs), etc., and whether the same have been taken into account for calculating voting rights of target company and reasons therefor. In case there are partly paid up shares, disclose about status of their voting rights.

4. Present composition of the Board of Directors (BoD) as on the date of public announcement. Indicate the names of director(s), if any, representing the acquirer on the BoD of the target company and their dates of appointment.

5. Relevant details of any merger/demerger, spin off during last 3 years involving the target company. Change of name since listing and dates thereof.

6. Brief audited details for a period of last three years. The subsequent certified financial data should also be disclosed so that the financial (details) are not older than six months from the P.A. date.

(Amount Rs. in lakhs)

Profit and loss statement	Year I	Year II	Year III
Income from operations
Other income
Total income
Total expenditure
Profit before depreciation, interest and tax
Depreciation
Interest
Profit before tax
Provision for tax
Profit after tax
Balance sheet statement	Year I	Year 11	Year III
Sources of funds
Paid up share capital
Reserves and surplus (excluding revaluation reserves)
Networth
Secured loans
Unsecured loans
Total
Uses of funds
Net fixed assets
Investments
Net current assets
Total miscellaneous expenditure not written off
Total

Other financial data	Year I	Year II	Year III
Dividend (%)
Earning per share
Return on net worth
Book value per share

7. Pre and post‑offer shareholding pattern of the target company as per the following table:

Shareholders’ category	Shareholding and voting rights prior to the agreement/ acquisition and offer	Shares/voting rights agreed to be acquired which triggered off the regulations	Shares/voting rights to be acquired in open offer (assuming full acceptances)	Share holding/ voting rights after the acquisition and offer i.e., (a) +(b) + (c)
	(a)	(b)	(c)	(d)
	No. %	No. %	No. %	No. %

1. Promoter group

(a) Parties to agreement, if any,

(b) Promoters other than (a) above

2. FIs/MFs/FIIs/Banks, SFIs (indicate names)

3. Acquirers

(a) Main acquirer*

(b) PACs*

Total 3 (a + b)

4. Parties to agreement other than

(1) (a) and 3

(2) Public (other than 1 to 4)

Total(1+2+3+4+5)

* If more than one acquirer /PACs, details shall be given for each separately.

5. Offer price and financial arrangements

5.1 Justification of offer price

Disclose the following:

(i) Names of all the stock exchanges (SEs) where shares of the target company are listed and also where it is traded under permitted category.

(ii) The annualised trading turnover during the preceding 6 calendar months prior to the month in which the P.A. is made in terms of number and % of total listed shares, in each stock exchange stated at (i) above, shall be given as under. (Accordingly, disclose as to on which of the stock exchanges the shares are not frequently/ infrequently traded in terms of Explanation (i) to regulation 20(3).)

Name of stock exchange(s)	Total No. of shares Traded during the 6 Calendar months prior to the month in which PA was made	Total No. of listed shares	Annualised trading turnover (in terms of % to total listed shares)
SE 1
SE 2
SE 3

Note.‑ Trading volume data should be taken from the respective SEs official quotations.

(iii) In respect of SEs where shares are not infrequently traded in terms of regulations, ensure and disclose that minimum offer price is highest of all the following prices:

(a) Negotiated price under the agreement as indicated in regulation 20 (2)(a);

(b) Highest price paid by the acquirer/PACs for any acquisitions including by way of allotment in a public or rights issue during 26 week period prior to the date of PA, as indicated in regulation 20(2)(b);

(c) Price paid under preferential allotment made to the acquirer or PACs, at any time during the 12 months period upto the date of closure of the offer, as indicated in r9gulation 20(2)(c);

(d) The average price calculated as per regulation 20(2)(d) during the 26 weeks preceding the date of PA. Please note that for calculating average price as per regulation 20(2)(d), the denominator should contain the number of weeks for which quotes are considered. The price and volume data should be disclosed in the following format:

Week No.	Week ending	High (Rs.)	Low(Rs.)	Average (Rs.)	Volume

(i) If the shares are infrequently traded on a particular stock exchange, give required disclosures in accordance with each clause of regulation 20(3). Ensure that calculations of parameters set out in 20(3)(d) are based on the latest audited data of the target company. If subsequent financial data is available for a period of 6 months or more, calculation in terms of regulation 20(3)(d) based on such data shall also be disclosed.

(ii) In terms of regulation 20(6), give a specific statement that the offer price is justified.

(iii) Also ensure and disclose that the offer price shall not be less than the highest price paid by the acquirers (including PACs) for any acquisition of shares of target company from the date of PA upto 7 working days prior to the closure of the offer.

5.2 Financial arrangements:

(i) Disclose the total amount of funds required to make the payment of consideration for the shares tendered during the open offer (assuming full acceptances) and at the highest price, if the offer is subject to differential pricing.

(ii) Disclosures about the amount deposited in escrow account in terms of regulation 28(2).

(iii) In case, the escrow account consists of cash deposit, disclose the name and address of the bank, where cash amount as required under regulation 28(1) has been deposited. Also ensure and disclose that the MB has been empowered to operate the escrow account in accordance with the regulations.

(iv) In case the escrow account consists of bank guarantee, disclose the name and address of the bank. Also disclose that bank guarantee is valid at least for a period commencing from the date of PA until 30 days after the closure of the offer. Also ensure that bank gurantee is sought from a bank who is not associate of or group of the acquirer or target company,

(v) Disclose that the bank guarantee is in favour of merchant banker. In case, the escrow account consists of a deposit of securities in terms of regulation 28(4)(c), give details like name, quantity, face value, paid up value, market price on the date of creation of escrow account, the margin, etc. Disclose that merchant banker has been empowered by acquirer to realise the value of such escrow account by sale or otherwise. Also disclose that if there is any deficit on realisation of value of the securities, the merchant banker shall make good any such deficit in accordance with regulation 28(7).

(vi) In case the escrow account consists of a bank guarantee or deposit of approved securities, disclose the name and address of the bank where cash deposit of at least 1% of the total consideration payable, is made in accordance with regulation 28(10).

(vii) Ensure and disclose that the acquirer has adequate and firm financial resources to fulfill the obligations under the open offer. Disclosures regarding sources of funds should be made in terms of regulation 16(xiv).

(viii) Disclose the date of certificate and name of the Chartered Accountant certifying the adequacy of financial resources of acquirer for fulfilling all the obligations under the offer.

(ix) Ensure and disclose that MB has satisfied himself about the ability of the acquirer to implement the offer in accordance with the regulations.

6. Terms and conditions of the offer

1. All the operational terms and conditions subject to which acquirer(s) would accept the offer should be disclosed. The conditions mentioned in the matter of offer should not be in violation of the provisions contained in the regulations.

2. Locked in shares: Regarding acceptance of locked‑in shares, whether acquired pursuant to the agreement or the offer, the same can be transferred to the acquirer subject to the continuation of the residual lock‑in period in the hands of the acquirer. MB shall ensure that there shall be no discrimination in the acceptance of locked‑in and non‑locked‑in shares.

3. Eligibility for accepting the offer: Disclose that the offer is made to all the remaining shareholders (except the parties to agreement) whose names appeared in the register of shareholders (mention the specified date) and also to those persons who own the shares any time prior to the closure of the offer, but are not the registered shareholder(s).

4. Statutory approvals: Mention the nature of statutory approvals required for the offer. Disclose the current status of such approval. A statement that no approval other than those mentioned is required for the purpose of this offer shall be incorporated.

7. Procedure for acceptance and settlement

1. Procedure for accepting the offer by eligible persons shall be mentioned indicating:

Name and address of the persons (merchant banker/registrar) to whom the shares should be sent including name of the contact person, telephone No., Fax No. and email address, etc.	Working days and timings	Mode of delivery

Mention all the relevant documents viz., Form of Acceptance cum Acknowledgement, original share certificate, valid transfer deed required to be tendered.

Disclose that shares and other relevant documents should not be sent to the acquirer /PACs/target company.

2. Procedure for acceptance of the offer by unregistered shareholders, owners of shares who have sent them for transfer or those who did not receive the letter of offer:

(i) Procedure for said persons shall be specified. The option of applying on plain paper giving all relevant details and forwarding relevant documents along with it, shall necessarily be given to such shareholders. Alternatively, such share‑holders, if they so desire, may apply on the Form of Acceptance cum Acknowledgement obtained from the website (www.sebi.gov.in). It shall be noted that no indemnity is needed from the unregistered shareholders.

(ii) In terms of regulation 21(6), disclose the relevant provisions pertaining to acceptance of shares when shares offered under the offer by the shareholders are more than the shares agreed to be acquired by the acquirer(s).

(iii) Disclosure in line with sub‑regulation (12) of regulation (22) about extension of time for payment of consideration and payment of interest should be made.

(iv) Ensure and disclose that the unaccepted shares/documents shall be returned by registered post to the shareholders.

(v) Ensure and disclose that the share certificates would be held in trust by the manager to the offer/registrar to the offer, as the case may be, till the acquirer completes the offer obligations in terms of regulations.

(vi) In case, the shares of target company are dematerialised, MB should ensure to specify all the requisite procedural requirements in the LO.

8. Documents for inspection

1. For inspection of material documents by public, disclose the addresses of the places and timings. Such documents shall include:

(i) Certificate of incorporation, memorandum and articles of association of the acquirer, in case acquirer is a company;

(ii) A.C.A.'s certificate certifying the net worth of acquirer(s) in case acquirer is an individual;

(iii) A.C.A.'s certificate certifying the adequacy of financial resources with acquirers to fulfill the open offer obligations.

(iv) Audited annual reports of the acquirer and target company for the last three years.

(v) A letter from the bank confirming the amount kept in the escrow account and a lien in favour of MB.

(vi) A copy of the agreement, if any, which triggered the open offer.

(vii) A published copy of public announcement. (viii) A copy of the letter from SEBI in terms of proviso to regulation 18(2).

(ix) When escrow account consists of approved securities, details of securities such as name, quantity, face value, paid up value, market price on the date of creation of escrow, etc.

(x) Any other relevant document(s).

9. Declaration by the acquirers (including PACs, if any)

(i) Statements in terms of regulation 22(6) regarding the acquirer's responsibility for the information contained in the LO.

(ii) A statement to the effect that each of the acquirers (including PACs, if any) would be severally and jointly responsible for ensuring compliance with the regulations shall be incorporated in the LO.

(iii) 1.0 shall be signed by the acquirer(s)/owner of attorney holders on their behalf giving date and place. MB to ensure and disclose that person(s) signing the LO is duly and legally authorised by acquirers (including PACs, if any).

Encl.:

FORM OF ACCEPTANCE CUM ACKNOWLEDGEMENT

From ________________

To ________________

(The Merchant Banker/Registrar to the offer)

Dear Sir,

Sub: Open offer for purchase of _______ equity shares of (target company) representing ________ % of its voting capital at an offer price of Rs. ____ per fully paid up equity share and at an offer price of Rs. ______ per partly paid up equity share by (the acquirer and PACs).

I/We refer to the letter of offer dated for acquiring the equity shares held by me/us in (target company).

I/We, the undersigned have read the letter of offer and understood its contents including the terms and conditions as mentioned therein.

I/We, accept the offer and enclose the original share certificate(s) and duly signed transfer deed(s) in respect of my/our shares as detailed below:

Sr. No.		Ledger folio No.	Certificate Nos.	Distinctive Nos.	No. of shares


	Total

I/We confirm that the equity shares of (target company) which are being tendered herewith by me/us under this offer, are free from liens, charges and encumbrances of any kind whatsoever.

I/We note and understand that the original share certificate(s) and valid share transfer deed will be held in trust for me/us by the Merchant Banker/Registrar to the offer until the time the acquirer gives the purchase consideration as mentioned in the Letter of Offer. I/We also note and understand that the acquirer will pay the purchase consideration only after verification of the documents and signatures.

I/We authorise the acquirers to accept the shares so offered which they may decide to accept in consultation with the merchant banker and in terms of the Letter of Offer and l[We further authorise the acquirers to return to me/us, equity share certificate(s) in respect of which the offer is not found valid/not accepted, specifying the reasons thereof.

I/We authorise the acquirers or their Merchant Banker to send by registered post the draft/cheque, in settlement of the amount to the sole/first holder at the address mentioned below.

Yours faithfully,

Signed and delivered

Full Name(s) of the holders	Address	Signature
First/sole holder
Joint holder 1
Joint holder 2
Joint holder 3

Note: In case of joint holdings, all must sign. A Corporation must affix its Common Seal.

Place : _______________

Date : _______________

So as to avoid fraudulent encashment in transit, the shareholder(s) may provide details of bank account of the first/sole shareholder and the consideration cheque or demand draft will be drawn accordingly.

Name of the bank branch ___________ account Number _________ savings/current/(others; please specify) _________________________________________________ ____________________________________ tear along this line ____________________

Acknowledgement slip

Received from Mr/Ms. _____________________

Folio No. _____________________

Number of certificates enclosed _____________________

Certificate Numbers _____________________

Total number of shares enclosed _____________________

Stamp of collection centre _____________________

Signature of official _____________________

Date of receipt _____________________

Note : All future correspondence, if any, should be addressed to Registrar to the offer/merchant banker (mention name, address and telephone and fax number)

ANNEXURE I

(Applicable in case open offer is for the change in control of the target company or is an offer where the offer price is payable in terms of exchange of securities)

3.1 If acquirer(s) (including PACs, if any) is a company

1. Name and address of the company/(ies).

2. Relationship, if any, existing between them

3. Salient features of the agreement, if any, entered between them with regard to the offer/acquisition of shares

4. Brief history and major areas of operations.

5. Identity of the promoters and/or persons having control over such companies and the group, if any, to which such companies belong to.

6. Shareholding pattern as under.

Sl.No.	Shareholder's category	No. and percentage of shares held
1.	Promoters
2.	Fll/mutual-funds/Flslbanks
3.	Public
Total paid up capital

7. Names and residential addresses of Board of directors of acquirer(s). Confirm whether any of such director(s) is already on the Board of Directors of target company. If so, make Disclosures in terms of regulation 22(9).

8. Name of the stock exchanges where the shares of acquirer are listed/ traded in the permitted category, if acquirer is a listed company.

9. Total paid up capital, face value of shares and market price of shares.

10. Brief audited financial details indicated at 3.11 below shall also be disclosed after making the following adjustments in the audited financial statements wherever quantification is possible.

(a) Adjustments/rectification for all incorrect accounting policies or failures to make provisions or other adjustments which resulted in audit qualifications;

(b) Material amounts relating to adjustments for last three years shall be identified and adjusted in arriving at the profits of the years to which they relate;

(c) Where there has been a change in accounting policy during the last three years, the profits or losses of those years shall be re‑computed to reflect what the profits or losses of those years would have been if a uniform accounting policy was followed in each of these years. However, if an incorrect accounting policy is being followed, the re‑computation of the financial statements would be in accordance with correct accounting policies;

(d) Statement of profit or loss shall disclose both the profit or loss arrived at before considering extraordinary items and after considering the profit or loss from extraordinary items;

(e) The statement of assets and liabilities shall be prepared after deducting the balance outstanding on revaluation reserve account from both fixed assets and reserves and the net worth arrived at after such deductions.

11. Brief audited financial details shall be given for a period of last three years. The subsequent certified financial data should also be disclosed so that the financials are not older than six months from the P.A. date.

(Amount Rs. in lakhs)

Profit and loss statement	Year I	Year II	Year III
Income from operations
Other income
Total income
Total expenditure
Profit before depreciation interest and tax
Depreciation
Interest
Profit before tax
Provision for tax
Profit after tax
Balance sheet statement	Year I	Year II	Year III
Sources of funds
Paid up share capital
Reserves and surplus (excluding revaluation reserves)
Networth
Secured loans
Unsecured loans
Total
Uses of funds
Net fixed assets
Investments
Net current assets
Total miscellaneous expenditure not written off
Total
Other financial data	Year I	Year II	Year III
Dividend (%)
Earning per share
Return on net worth
Book value per share

12. The following information in respect of all the companies promoted by the acquirer (PACs, if any) for the last three years based on the audited statements:

Name of company, date of incorporation, nature of business, equity capital, reserves (excluding revaluation reserves), total income, profit after tax (PAT), earnings per shares (EPS), net asset value (NAV).

Mention, if any of the companies stated above is a sick industrial company.

3.2 If acquirer(s) (including PACs, if any) is an individual, the following details shall be given:

1. Name and residential addresses of each individual(s)

2. Relationship, if any, existing between them

3. Salient features of the agreement, if any, entered between them with regard to the offer/acquisition of shares.

4. Principal areas of business and relevant experience

5. Net worth duly certified by a Chartered Accountant

6. Positions held on the Board of directors of any listed company(ies)

7. Name of the company(ies) where individual is a full time director, Brief financial of those listed company(ies) where the individual along with persons acting in concert with him, has a controlling stake.

8. The information stated at 3.1.12 above, in respect of all companies promoted by acquirer(s) (PACs, if any).

3.3 Disclosure in terms of regulation 16(ix)

3.4 Option in terms of regulation 21(3), if applicable

If the public offer results in public shareholding being reduced to 10% or less of the voting capital of the company or if the public offer is in respect of a company which has public shareholding of less than 10% of the voting capital, disclose the option which the acquirer would exercise in terms of regulation 21(3).

3.5 Additional disclosures in case where consideration is to be paid by the acquirer(s) in terms of exchange of instruments in terms of regulation 20(1)(b) and/or(c).

1. Nature of instruments of acquirer company which are offered such as NCDs, FCDs, PCDs, shares etc.

2. In case, the instruments are convertible into equity shares or have rights to subscribe for equity shares, give details such as exercise period, price and date of conversion, pre and post equity capital assuming full conversion, etc.

3. In case consideration is paid by way of secured instruments, all the features of such instruments such as face value, interest rate, redemption period, redemption amount, details of security created, name of the debenture trustee, etc.

4. If the issue/allotment of instruments requires any approval from shareholders, whether the same has already been obtained/to be obtained; if yes, disclose all the relevant details of the approval which shall include the amount of instruments issued/proposed to be issued, price of instruments, date when resolution passed/proposed to be passed, validity of the resolution, etc. If the approval is yet to be obtained, status of it. In case, the resolution in this regard is not approved by the shareholders, disclose as to how the acquirer proposes to fulfil the offer obligations.

5. Ensure and disclose the value of such instruments determined in terms of regulation 20(5).

(3)

MOST FREQUENTLY ASKED QUESTIONS ABOUT TAKEOVERS & SUBSTANTIAL ACQUISITION OF SHARES

Note: The answers given here are general in nature and are mostly in response to queries received by SEBI. These questions and the answers have been formulated to present the reader with a broad understanding of the subject; more particularly, the procedure/operation of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as amended from time to time.

As the contents are informative in nature, the reader is also advised to go through the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments which is available in our website http://sebi. gov.in.

1. What is meant by takeovers & substantial acquisition of shares?

When an 'acquirer' takes over the control or management of the 'target company' it is termed as takeover.

When an acquirer acquires 'substantial quantity of shares or voting rights' of the target company, it results into substantial acquisition of shares. The term 'substantial' which is used in this context has been clarified subsequently.

2. Who is the target company and who is the acquirer?

The target company is a company whose shares are listed on stock exchange(s) and whose shares or voting rights are acquired/being acquired or whose control is taken over/being taken over by the acquirer.

The acquirer includes any individual1company/any other legal entity who intends to acquire or acquires substantial quantity of shares or voting rights of target company or acquires or agrees to acquire control over the target company along with persons acting in concert (PAC) with him.

3. What is meant by the term 'persons acting in concert (PAC)'?

PAC are individual (s)/company(ies)/any other legal entity(ies) who are acting in concert for a common objective or for a purpose of substantial acquisition of shares or voting rights or gaining control over the target company either directly or indirectly. Inherent in this action of acting in concert is an element of co‑operation between the entities. This co‑operation may be either direct or indirect, formal or informal.

The concept of PAC assumes significance in the context of takeovers, since it is possible that an acquirer can acquire shares or voting rights in a company 'in concert' with any other person in a manner that the acquisitions made by him remain below the threshold limit, though taken together with the voting rights of persons acting in concert, the threshold may exceed.

In the regulations, certain entities are presumed to be acting in concert, unless the contrary is established like companies with its holding company or subsidiary company, mutual funds with its sponsor/trustee/as set management company etc.

4. How substantial quantity of shares or voting rights is defined?

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 has defined substantial quantity ofshares or voting rights separately for two different purposes:

I. For the purpose of disclosures to be made by acquirer(s):

(1) 5% or more shares or voting rights:

A person who, along with PAC, if any, (referred to as 'acquirer' hereinafter) acquires shares or voting rights (which when taken together with his existing holding) would entitle him to more than 5% shares or voting rights of target company, is required to disclose the aggregate of this shareholding to the target company within 4 working days of acquisition or within 4 working days of receipt of intimation of allotment of shares.

(2) More than 15% shares or voting rights:

An acquirer who holds more than 15% shares or voting rights of target company, shall within 21 days from the financial year ending March 31 as well as the record date fixed for the purpose of dividend declaration, disclose his aggregate shareholding to the target company.

The target company is, in turn, required to inform all stock exchanges where the shares of target company are listed, within 30 days from the financial year ending March 31 as well as the record date fixed for the purpose of dividend declaration.

II. For the purpose of making an open offer by acquirer:

(1) 15% shares or voting rights:

An acquirer who intends to acquire shares which along with his existing shareholding would entitle him to more than 15% voting rights, can acquire such additional shares only after making a public announcement (PA) to acquire at least additional 20% of the voting capital of target company from the shareholders through an open offer.

(2) Creeping limit of 5%:

An acquirer who is having 15% or more, but less than 75% of shares or voting rights of a target company, can consolidate his holding up to 5% of the voting rights in any period of 12 months. However, any additional acquisition over and above 5% can be made only after making a public announcement to acquire at least 20% shares of target company from the shareholders through an open offer.

(3) Consolidation of holding:

An acquirer who is having 75% shares or voting rights of target company, can acquire further shares or voting rights only after making a public announcement specifying the number of shares to be acquired through open offer from the shareholders of a target company.

5. How is 'control' defined?

Control includes the right to appoint majority of directors on the Board of a target company or to control management or policy decisions affecting target company. It may be noted here that this definition is only illustrative in nature.

An acquirer who is in control over the company, is required to comply with the disclosure requirements as specified in Ans. (I), (2) to Q. (4) above.

An acquirer who intends to gain control over the target company, is required to comply with the requirements specified in Ans. (II) to Q. (4) above i.e. making a public announcement to acquire shares from the existing shareholders of target company.

6. What is public announcement (PA)?

Public announcement is an announcement given in the newspapers by acquirer primarily disclosing his intention to acquire a minimum of 20% shares of target company from existing shareholders by means of an open offer. The other disclosures in this announcement include the offer price, number of shares to be acquired from the public, identity of acquirer, purpose of acquisition, future plans of acquirer, if any, regarding the target company, change in control over the target company, if any, the procedure to be followed by acquirer in accepting the shares tendered by the shareholders and the period within which all the formalities pertaining to the offer would be completed.

The PA is made to ensure that the shareholders of the target company are aware of the exit opportunity available to them in case of a takeover/substantial acquisition of shares of the target company. They may, on the basis of disclosures contained therein and in the letter of offer, either continue with the target company or decide to exit from it.

7. Can acquirer make an offer for less than 20% of shares?

Yes, acquirer can make an offer for less than 20% of shares of target company in case the acquirer is already holding 75% or more of voting rights/shareholding in the target company and has deposited in the escrow account in cash a sum of 50% of the consideration payable under the public offer.

8. Who is required to make a public announcement and when is the public announcement required to be made?

The acquirer is required to appoint a merchant banker (MB) registered with SEBI before making a PA and through MB, acquirer is required to make a PA within four working day of the entering into an agreement to acquire shares which triggered off the takeover code.

9. Whether appointment of merchant banker for the offer process is mandatory?

Yes, as mentioned above, appointment of MB is mandatory for the offer process which starts with making a PA.

10. What documents are to be filed with SEBI after making a PA and when are these documents to be riled?

The acquirer is required to file a draft offer document with SEBI through the merchant banker within 14 days from the date of public announcement along with filing fee of Rs. 50,000 per offer document (payable by banker's cheque/demand draft).

Along with the draft offer document, the merchant banker also has to submit a due diligence certificate as well as certain registration details as per SEBI Circular No.1 RMB (GI Series), dated 26 June,1997.

The filing of the draft offer document is a joint responsibility of both acquirer as well as MB.

11. Does SEBI 'approve' the draft offer document? What happens thereafter?

SEBI does not approve or vet the draft offer document. The role of SEBI is to ensure that the disclosures made in the offer document are generally adequate to enable the shareholders to make an informed decision regarding the offer. SEBI only conveys its comments, if any, on the draft offer document to the merchant banker which may result in certain disclosures to be made in the offer document before it is despatched to the shareholders. SEBI is, however, under no obligation to send any comments on draft offer document.

The merchant banker, being the registered intermediary is expected to ensure that the offer document contains all the relevant information in full and also accuracy thereof.

12. What is offer document and how would shareholders know the disclosures contained therein?

The acquirer through MB sends the offer document as well as the blank acceptance from within 45 days from the date of PA, to all the shareholders whose names appear in the register of the company on a particular date (mentioned as specified date in PA). The offer remains open for 30 days. The shareholders are required to send their share certificate(s)/related documents to Registrar or merchant banker as specified in PA and in offer document. The acquirer is required to pay consideration to all those shareholders whose shares are accepted under the offer, within 30 days from the closure of offer.

In their own interest, the shareholders are advised to send such documents under registered post. Further, the shareholders may also note that under no circumstances, such documents should be sent to the acquirer.

13. How is the price determined in an open offer? Does SEBI approve the price?

SEBI does not approve the offer price but ensures that all the relevant parameters are taken into consideration for fixing the offer price and that justification of the same is disclosed in the offer document.

The relevant parameters are

(a) Negotiated price under the agreement which triggered the open offer.

(b) Highest price paid by acquirer or persons acting in concert with him for any acquisitions, including by way of allotment in public or rights issue during the 26 week period prior to the date of the PA.

(c) Price paid by acquirer under a preferential allotment made to him or to persons acting in concert at any time during the 12 months period up to date of closure of offer.

(d) Average of weekly high & low of the closing prices of shares as quoted on the stock exchanges, where shares of target company are most frequently traded during 26 weeks prior to the date of the public announcement.

In case the shares of target company are not frequently traded (definition of this term is given in regulation), then instead of point (d) above, parameters based on the fundamentals of the company such as return on net worth of the company, book value per share, EPS etc. are also required to be considered and disclosed.

14. Are only those shareholders whose names appear in the register of target company on a specified date, eligible to tender their shares in the open offer?

No, even the shareholders of the target company whose names do not appear in the register of the target company on the specified date but are holding the shares of target company any time during the offer period, are entitled to participate in the offer in accordance with the procedure laid down for them in public announcement/offer document.

15. What happens if there is a competitive offer and I have availed the first offer at a lower price? Can I switch my acceptance to a better offer?

No, the switching of acceptances between different offers is not possible. The offer once accepted by a shareholder cannot be withdrawn. To enable the shareholders to be in a better position to decide as to which of the subsisting offers is better, and also not to cause last minute decisions/confusion, the offer price is effectively frozen for 7 working days upto the closing date of the offers. Shareholders would be advised to wait till the commencement of that period to be aware of upward revisions in the offer price of either offers. (initial & competitive).

16. Can one withdraw from offer after making an offer?

No, the offer once made cannot be withdrawn except in the following circumstances:

* withdrawal is consequent upon any competitive bid;

* statutory approval(s) required have been refused;

* the sole acquirer being a natural person has died;

* such circumstances as in the opinion of the Board merits withdrawal.

17. How can I avail the offer if I have not received the O.D. and offer closure date is very near?

The public announcement contains procedure for such cases i.e. where the shareholder does not receive the offer document in time/does not receive it at all. The shareholders are usually advised to send their consent to Registrar to offer, if any, or to MB on plain paper stating the name, address, number of shares held, distinctive folio No. No. of shares offered and bank details along with the documents mentioned in the public announcement, before closure of the offer.

For further information, the Registrar or merchant banker may be contacted.

18. Is there any compensation to a shareholder for delayed receipt of payment under the offer?

Acquires are required to complete the payment of consideration to shareholders who have accepted the offer within 10 days frorn the date of closure of the offer. In case the delay in payment is on account of non‑receipt of statutory approvals, and if the same is not due to willful default or neglect on part of the acquirer, the acquirer would be liable to pay interest to the shareholders for the delayed period in accordance with regulations. Acquirer(s) however cannot be made accountable for postal delays.

If the delay in payment of consideration is not due to the above reasons, it would be treated as a violation of the regulations.

19. Is the acquirer required to accept all shares under the open offer?

No, if the shires reccived by the acquirer are more than the shares agreed to be acquired by him pursuant to the, offer, then the shares would be accepted on proportional basis without resulting in non-marketable lots. Please also note that MB/acquirer is requited to ensure that shares accepted from shareholders shall not be less than the minimum marketable lot or the entire holding if it is less than the marketable lot.

20. What are the safeguards incorporated in the takeover process so as to ensure that shareholders get their payments under the offer/receive back their share certificates?

Before making the public announcement, the acquirer has to create an escrow account having 25% of total consideration payable under the offer size of Rs. 100 crores (additional % for offer size more than 100 crores is specified in the regulations). The escrow could be in the form of cash deposited with a scheduled commercial bank, bank guarantee in favour of the merchant banker or deposit of acceptable securities with appropriate margin with the merchant banker. 'Me merchant banker is also required to confirm that firm financial arrangements are in place for fulfilling the offer obligations. In case, the acquirer fails to make payment, MB has a right to forfeit the escrow account and distribute the proceeds in the following way.

(a) 1/3 of amount to target company;

(b) 1/3 to regional SEs, for credit to investor protection fund etc.

The merchant banker advised by SEBI is required to ensure that the rejected documents which are kept in the custody of the Registrar/merchant banker are sent back to the shareholder through registered post.

Besides forfeiture of escrow account, SEBI can take separate action against the acquirer which may include prosecution/barring the acquirer from entering the capital market for a period etc.

21. Whether all types of acquisitions of shares or voting rights over and above the limits specified in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, necessarily require acquirer to make a public announcement and follow up with an open offer?

No, SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 have laid down certain categories of acquisitions in regulation 3, which will not attract open offer obligations.

Thus, if the transaction through which the acquirer has acquired shares above the threshold limits/creeping limit, falls under one of the categories mentioned in regulation 3 (by satisfying the conditions laid down in the respective sub‑regulation of regulation 3) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the acquirer need not make an open offer.

22. Which are those transactions referred above where reporting to SEBI is mandatory?

Reporting is mandatory under regulation 3(4) in the following acquisitions :

* Where acquirer acquires shares over and above the public issue (reg. 3(1)(a)).

* Where acquirer acquires shares in rights issue (reg. 3(1)(b)).

* Where acquirer acquires shares in preferential allotment (reg. 3(1)(c)).

* Where the acquisition can be termed as inter se transfer amongst group companies, inter se transfer amongst relatives, inter se transfer amongst Indian promoters and foreign collaborators and inter se transfer amongst promoters. (regulation 3(1)(e)(i), (ii) & (iii)).

* Where the acquisition involves transfer of shares from State level financial institutions to co‑promoters of company pursuant to the agreement.

However, the acquirer is advised to satisfy that they fulfill the requirements of exemptions available, before acquisitions.

23. What is the time frame to submit such report and procedure, fee thereof ?

The report is required to be submitted to SEBI within 21 days from the date of acquisition/allotment along with filing fees of Rs. 10,000 per report.

24. Is there any prescribed form of application for various reports/documents mentioned above?

Yes.

25. What exemptions (for making an offer) are available for which even reporting to SEBI is not mandatory?

The following transactions are exempted from making an offer and are not required to be reported to SEBI

(i) allotment to underwriter pursuant to any underwriting agreement;

(ii) acquisition of shares in ordinary course of business by:

* regd. stock brokers on behalf of clients;

* regd. market makers;

* public financial institutions on their own account;

* banks & FIs as pledges;

* acquisition of shares by way of transmission on succession or by inheritance;

* acquisition of shares by Government companies;

* acquisition pursuant to a scheme framed under section 18 of SICA, 1985;

* arrangement/restructuring including amalgamation or merger or de‑merger under any law or regulation‑Indian or foreign;

* acquisition of shares in companies whose shares are not listed.

However, if by virtue of acquisition of shares of unlisted company, the acquirer acquires shares or voting rights (over the limits specified) in the listed company, acquirer is required to make an open offer in accordance with the regulations.

26. What is the information required to be furnished to stock exchanges in compliance of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and when is it required to be furnished?

For transactions which entail reporting requirements, details of the proposed acquisition need to be filed with SEs where shares of target company are listed, at least four working days before the date of actual acquisition/allotment.

Further acquisitions by any acquirer who acquires shares/voting rights which along with his existing shares, make its shareholding more than 5%, require reporting by him to the target company within 4 working days of the date of acquisition/allotment and by the target company to the stock exchanges within 7 days thereof. [Refer Chapter II of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 for further details].

For acquisitions pertaining to public offer obligations, a copy of the public announcement is to be given to the stock exchanges at least 2 working days in advance of its issue. Subsequently, upward revisions in offer, withdrawal of offer has also to be intimated to the stock exchanges simultaneously.

27. What happens if the acquirer/target company/merchant banker violates the provisions of the regulations?

The regulations have laid down the general obligations of acquirer, target company and the merchant banker. For failure to carry out these obligations as well as for failure/non‑compliance of other provisions of the regulations, the regulation have laid down the penalties for non‑compliance. These penalties may include forfeiture of the escrow account, directing the person concerned to sell the shares acquired in violation of the regulations, directing the person concerned not to further deal in securities, monetary penalties, prosecution etc.

Further, the Board of directors of the target company would also be liable for action in terms of the regulations and the SEBI Act for failure to carry out their obligations specified in the regulations.

Action can also be initiated for suspension, cancellation of registration against an intermediary such as the indicant banker to the offer.

28. Are mergers and amalgamations of companies also covered under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997?

No, only takeovers and substantial acquisition of shares of a listed company fall within purview of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. Mergers and Amalgamations are outside the purview of SEBI as they constitute a subject matter of the Companies Act, 1956.

29. What is the takeover panel?

There may be some transactions which are not covered in the categories mentioned under regulation 3, but in the opinion of the acquirer, may warrant exemption from open offer obligations. Such cases may be referred to the takeover panel.

The takeover panel consists of independent persons. The present composition of the takeover panel is as follows :

Justice S.M. Jhunjunwalla: Retd. Judge, Mumbai, High Court, Chairman.

Shri S.C. Bafna: Former member of the Company Law Board.

Shri S.A. Dave: Former Chairman, SEBI and Former Chairman‑UTI.

Shri A.R. Gandhi: Sr. Partner, N M Raiji & Co.

Shri Kamath : Banking Ombudsman and Former Chairman, Bank of Maharashtra.

30. What is the procedure for application to takeover panel?

The acquirer shall make an application giving all the relevant details duly signed along with fee per application of Rs. 25,000 either by a banker's cheque or demand draft in favour of 'Securities and Exchange Board of India' payable at Mumbai. There is no standard format of the application. The acquirer is expected to give the details in a logical manner and also the justification for claiming exemption along with the relevant documents in support of its application.

31. Whether the application to takeover panel is before or after the acquisition? Time frame, if any?

The application to takeover panel is to be made before the acquisition of shares/ control of the target company takes place. The application should be addressed to takeover panel and sent to the address of SEBI at:

Securities and Exchange Board of India

Mittal Court, B Wing

1^st Floor, Nariman Point

Mumbai‑400 021

Within 20 days from the date of receipt of application, the takeover panel makes a recommendation on the application to SEBI. SEBI after affording reasonable opportunity to the concerned parties, passes an order on the application within 30 days thereof.

32. Is there any book available from SEBI on this subject? How can I obtain the same by post? Address, if any?

A copy of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 can be obtained from our Research & Publication Department at 15th Floor, Earnest House, Nariman Point, Mumbai‑400 021 on payment of Rs. 50 in cash, on Mondays, Wednesdays and Fridays between 10.30 a.m. and 12.30 p.m. For postal delivery of the same, under registered A.D., additional postal charges (Rs. 45) should be added to the price of book i.e. Rs. 50 per book. The demand draft should be drawn in favour of the 'Securities and Exchange Board of India', payable at Mumbai.

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 were notified taking into consideration the recommendations of the P.N. Bhagwati committee which was constituted by SEBI in November, 1995 under the Chairmanship of Justice P.N. Bhagwati, former Chief Justice of India to review the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994. A copy of Bhagwati Committee Report can also be obtained from our Research & Publication Department, on payment of Rs. 50 in cash per copy or by registered post against a demand draft drawn in favour of the 'Securities and Exchange Board of India', payable at Mumbai for an amount which should include price of the report (Rs. 50 per copy) and the postal charges of Rs. 30 (Regd. A/D).

The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments are also available at SEBI's website http://www.sebi. gov.in

For any other information regarding Substantial Acquisition of Shares and Takeovers, you may address your query to SEBI, FITTC‑Takeover Division at Mittal Court, B Wing, First Floor, Nariman Point, Mumbai‑400 021.

For text of the Annexure, see Appendix 84(1) and 84(2).

SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS, 1997

CHAPTER I

NOTES

CHAPTER II

DISCLOSURES OF SHAREHOLDING AND CONTROL IN A LISTED COMPANY

NOTES

CHAPTER III

NOTES

NOTES

NOTES

CHAPTER IV

BAIL OUT TAKEOVERS

CHAPTER V

INVESTIGATION AND ACTION BY THE BOARD

NOTES

ANNEXURE

General Details

Acquirers' Details

FORM A

FORM B

FORM E

Annexure I

Format of the register to be maintained by listed companies under regulation 8(4) of SEBI

FORMAT OF DUE DILIGENCE CERTIFICATE

FORMAT OF THE STANDARD LETTER OF OFFER

Year III

Balance sheet statement

Paid up equity shares of target company

Fully paid up equity shares

Partly paid up equity shares

Total paid up equity shares

Total voting rights in target company

Other financial data

FORM OF ACCEPTANCE CUM ACKNOWLEDGEMENT